Exercise 20-19 (Algo) Error correction; inventory error (LO20-6] During 2021, WMC Corporation discovered that its ending inventories reported on its financial statements were misstated by the following amounts: 2019 understated by 2020 overstated by $160,000 230,000 WMC uses the periodic inventory system and the FIFO cost method. Required: 1-a. Determine the effect of 2019 errors on retained earnings at January 1, 2021, before any adjustments. (Ignore income taxes.) 1-b. Determine the effect of 2020 errors on retained earnings at January 1, 2021, before any adjustments. (Ignore income taxes.) 2. Prepare a journal entry to correct the error in 2021. 3. Will WMC account for the error (a) retrospectively or (b) prospectively? Complete this question by entering your answers in the tabs below. Req 1A Req 1B Reg 2 Reg 3 Determine the effect of 2019 errors on retained earnings at January 1, 2021, before any adjustments. (Ignore income taxes.) (If the answers is no effect then select "No effect" in the dropdown.) 2019 2019 effect on 2021 Beginning inventory Plus: net purchases Less: ending inventory Cost of goods sold Beginning inventory Plus: net purchases Less: ending inventory Cost of goods sold Revenues Revenues Less: cost of goods sold Less: other expenses Net income Less: cost of goods sold Less: other expenses Net income Retained earnings Retained earnings Req 1A Req 1B Req 2 Req 3 Determine the effect of 2020 errors on retained earnings at January 1, 2021, before any adjustments. (Ignore income taxes.) (If the answers is no effect then select "No effect" in the dropdown.) 2020 Beginning inventory Plus: net purchases Less: ending inventory Cost of goods sold Revenues Less: cost of goods sold Less: other expenses Net income Retained earnings Journal entry worksheet