The accounting records of Walls China Shop reflected the following balances as of January 1, Year 3:

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The accounting records of Wall’s China Shop reflected the following balances as of January 1, Year 3:

Cash ..................................... .............................$80,100
Beginning inventory  .......................................33,000 (220 units @ $150)
Common stock  ................................................50,000
Retained earnings  ...........................................63,100

The following five transactions occurred in Year 3:
1. First purchase (cash): 150 units @ $155
2. Second purchase (cash): 160 units @ $160
3. Sales (all cash): 410 units @ $320
4. Paid $38,000 cash for salaries expense
5. Paid cash for income tax at the rate of 25 percent of income before taxes


Required
a. Compute the cost of goods sold and ending inventory, assuming (1) FIFO cost flow, (2) LIFO cost flow, and (3) weighted-average cost flow. Compute the income tax expense for each method.
b. Prepare the Year 3 income statement, balance sheet, and statement of cash flows under FIFO, LIFO, and weighted average.

Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula                Ending Inventory Formula =...
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Related Book For  book-img-for-question

Introductory Financial Accounting for Business

ISBN: 978-1260299441

1st edition

Authors: Thomas Edmonds, Christopher Edmonds

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