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Question - During 2018, WMC Corporation discovered that its ending inventories reported on its financial statements were misstated by the following amounts:
2016 understated by $120,000
2017 overstated by 150,000
WMC uses the periodic inventory system and the FIFO cost method.
Determine the effect of these errors on retained earnings at January 1, 2018, before any adjustments. (Ignore income taxes.)
Prepare journal entry to correct the error.
What other step(s) would be taken in connection with the error?
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