Whaley Distributors is a wholesale distributor of electronic components. Financial statements for the years ended December 31, 2019 and 2020, reported the following amounts and subtotals ($ in millions): Assets Liabilities Shareholders' Equity Net Income Expenses 2019 $ 660 $ 290 $ 370 $ 170 $ 142 2020 740 360 380 190 167 In 2021, the following situations occurred or came to light: Internal auditors discovered that ending inventories reported on the financial statements the two previous years were misstated due to faulty internal controls. The errors were in the following amounts: 2019 inventory Overstated by $ 11.2 million 2020 inventory Understated by $ 9.2 million A liability was accrued in 2019 for a probable payment of $5.4 million in connection with a lawsuit ultimately settled in December 2021 for $3.2 million. A patent costing $13.2 million at the beginning of 2019, expected to benefit operations for a total of six years, has not been amortized since acquired. Whaleys conveyer equipment was depreciated by the sum-of-the-years-digits (SYD) basis since it was acquired at the beginning of 2019 at a cost of $18.0 million. It has an expected useful life of five years and no expected residual value. At the beginning of 2021, Whaley decided to switch to straight-line depreciation. Required: For each situation: 1. Prepare any journal entry necessary as a direct result of the change or error correction, as well as any adjusting entry for 2021 related to the situation described. (Ignore tax effects.) 2. Determine the amounts to be reported for each of the five items shown above from the 2019 and 2020 financial statements when those amounts are reported again in the 20192021 comparative financial statements.

1 Record entry necessary as a direct result of the change or error correction. 2 Record adjusting journal entry if needed for 2021. 3 Record entry necessary as a direct result of the change or error correction. 4 Record adjusting journal entry if needed for 2021. 5 Record entry necessary as a direct result of the change or error correction. 6 Record adjusting journal entry if needed for 2021. Record entry necessary as a direct result of the change or error correction. 8 Record adjusting journal entry if needed for 2021. Assets Liabilities Shareholders' Net Income Equity Expenses $ 660 $ 290 $ 370 $ 170 $ 142 2019 2019 inventory Loss contingency Patent amortization Depreciation $ $ 660.0 $ 290.0 $ 370.0 $ 170.0 $ 142.0 | $ 740 $ 360 $ 380 $ 190 $ 167 2020 2019 inventory 2020 inventory Loss contingency Patent amortization Depreciation 740.0 360.0 $ 380.0 190.0 $ 167.0