During 2021, WMC Corporation discovered that its ending inventories reported in its financial statements were misstated by

Question:

During 2021, WMC Corporation discovered that its ending inventories reported in its financial statements were misstated by the following material amounts:

WMC uses a periodic inventory system and the FIFO cost method.

Required:1. Determine the effect of these errors on retained earnings at January 1, 2021, before any adjustments. Explain your answer.2. Prepare a journal entry to correct the errors.3. What other step(s) would be taken in connection with the correction of the errors?

Financial Statements
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