Item1 5 points Return to question Item 1Item 1 5 points Problem 5-19A Effect of different inventory cost flow methods on financial statements LO 5-1 The accounting records of Wall's China Shop reflected the following balances as of January 1, Year 2: Cash $ 18,300 Beginning inventory 13,485 (145 units @ $93) Common stock 14,600 Retained earnings 17,185 The following five transactions occurred in Year 2: First purchase (cash) 125 units @ $95 Second purchase (cash) 200 units @ $103 Sales (all cash) 435 units @ $199 Paid $16,400 cash for salaries expenses. Paid cash for income tax at the rate of 40 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. Record the above transactions in general journal form and post to T-accounts assuming (1) FIFO cost flow, (2) LIFO cost flow, and (3) weighted-average cost flow. Assume perpetual inventory system is used. 1. FIFO 2. LIFO 3. Weighted Average c. Use a vertical model to show the Year 2 income statement, balance sheet, and statement of cash flows under FIFO, LIFO, and weighted average.