Cash $18,800

Beginning inventory 18,690 (210 units @ $89)

Common stock 15,200

Retained earnings 22,290

The following five transactions occurred in Year 2:

First purchase (cash) 125 units @ $91

Second purchase (cash) 200 units @ $99

Sales (all cash) 365 units @ $192

Paid $13,150 cash for salaries expense

Paid cash for income tax at the rate of 25 percent of income before taxes

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.

b.Use a vertical model to show the Year 2 income statement, balance sheet, and statement of cash flows under FIFO, LIFO, and weighted average. (Hint: Record the events under an accounting equation before preparing the statements.)