Whaley Distributors is a wholesale distributor of electronic components. Financial statements for the years ended December 31, 2016 and 2017, reported the following amounts and subtotals ($ in millions):

Assets Liabilities Shareholders Equity Net Income Expenses

2016 $740 $330 $410 $210 $150

2017 $820 $400 $420 $230 $175.

A. In 2018, 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:

2016 inventory overstated by $12 million

2017 inventory understated by $10 million

B. A liability was accrued in 2016 for a probable payment of $7 million in connection with a lawsuit ultimately settled in December 2018 for $4 million.

C. A patent costing $18 million at the beginning of 2016, expected to benefit operations for a total of six years, has not been amortized since acquired.

D. Whaleys conveyer equipment was depreciated by the sum-of-the-years-digits (SYD) basis since it was acquired at the beginning of 2016 at a cost of $30 million. It has an expected useful life of five years and no expected residual value. At the beginning of 2018, Whaley decided to switch to straight-line depreciation. Required:

For each situation: Prepare any journal entry necessary as a direct result of the change or error correction as well as any adjusting entry for 2018 related to the situation described. (Ignore tax effects.)

1.Record entry necessary as a direct result of the change or error correction for A

2.Record adjusting journal entry if needed for 2018 for A

3.Record entry necessary as a direct result of the change or error correction for B

4.Record adjusting journal entry if needed for 2018 for B

5.Record entry necessary as a direct result of the change or error correction for C

6.Record adjusting journal entry if needed for 2018 for C

7.Record entry necessary as a direct result of the change or error correction for D

8.Record adjusting journal entry if needed for 2018 for D