Problem 5-19A (Algo) 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 $ 18,100 Beginning inventory 13,330 (155 units @ $86) Common stock 15,700 Retained earnings 15,730 The following five transactions occurred in Year 2: First purchase (cash): 120 units @ $88 Second purchase (cash): 195 units @ $96 Sales (all cash): 420 units @ $195 Paid $14,300 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 each of the cost flows listed. 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.

Problem 5-19A (Algo) 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. The following five transactions occurred in Year 2: 1. First purchase (cash): 120 units @ $88 2. Second purchase (cash): 195 units @ \$96 3. Sales (all cash): 420 units @ $195 4. Paid $14,300 cash for salaries expenses 5. 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 each of the cost flows listed. 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. Answer is not complete. Complete this question by entering your answers in the tabs below. Compute the cost of goods sold and ending inventory, assuming (1) FIFO cost flow, (2) LIFO cost flow, and (3) weightedaverage cost flow. Compute the income tax expense for each method. (Round intermediate calculations to 3 decimal places. Round your final answers to the nearest whole dollar amount.)