Question: 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

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 2020 overstated by understated by $158,000 226,000 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

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