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During 2018, WMC Corporation discovered that its ending inventories reported in its financial statements were...

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Accounting

During 2018, WMC Corporation discovered that its ending inventories reported in its financial statements were misstated by the following material amounts:

2016 understated by $ 130,000
2017 overstated by 160,000

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, 2018, before any adjustments. (Ignore income taxes.)

2. Prepare a journal entry to correct the errors.

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