Whaley Distributors is a wholesale distributor of electronic components. Financial statements for the years ended December 31, 2011 and 2012, reported the following amounts and subtotals ($ in millions):

	Assets			Liabilities			Shareholders' Equity			Net Income			Expenses
2011	$	760		$	340		$	420		$	220		$	152
2012		840			410			430			240			177

In 2013 the following situations occurred or came to light:

a.	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:

2011 inventory	Overstated by	$	12.2	million
2012 inventory	Understated by	$	10.2	million

b.

A liability was accrued in 2011 for a probable payment of $7.4 million in connection with a lawsuit ultimately settled in December 2013 for $4.2 million.

c.

A patent costing $19.2 million at the beginning of 2011, 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 2011 at a cost of $33.0 million. It has an expected useful life of five years and no expected residual value. At the beginning of 2013, 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 2013 related to the situation described. (Ignore tax effects.)

2.	Determine the amounts to be reported for each of the five items shown below from the 2011 and 2012 financial statements when those amounts are reported again in the 20112013 comparative financial statements.