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The accounting records of Sam's Bakery Shop reflected the following balances as of January 1, Year 2: Cash $ 16,400 Beginning inventory 17,600 (200 units
The accounting records of Sam's Bakery Shop reflected the following balances as of January 1, Year 2:
Cash | $ | 16,400 | ||
Beginning inventory | 17,600 | (200 units @ $88) | ||
Common stock | 15,900 | |||
Retained earnings | 18,100 | |||
The following five transactions occurred in Year 2:
- First purchase (cash) 115 units @ $90
- Second purchase (cash) 195 units @ $98
- Sales (all cash) 345 units @ $199
- Paid $14,800 cash for salaries expense
- Paid cash for income tax at the rate of 25 percent of income before taxes
FIFO LIFO Weighted Average $ 30,890 $ 32,540 $ 31,835 Cost of goods sold Ending inventory $ 16,170 $ 14,520 $ 15,225 Income Statements For the Year Ended December 31, Year 2 FIFO LIFO Sales Cost of goods sold Gross margin Salaries expense Income before tax Income tax expenses Net income $ 68,655 30,890 37,765 14,800 22,965 5,741 $ 17,224 $ 68,655 32,540 36,115 14,800 21,315 5,329 $ 15,986 Weighted Average $ 68,655 31,835 36,820 14,800 22,020 5,505 $ 16,515 Balance Sheets As of December 31, Year 2 FIFO LIFO Weighted Average Assets Cash Inventory $ 35,054 16,170 $ 35,466 14,520 $ 35,290 15,225 $ 51,224 $ 49,986 $ 50,515 Total assets Stockholders' equity Common stock Retained earnings $ 15,900 35,324 $ 15,900 34,086 $ 15,900 34,615 Total stockholders' equity $ 51,224 $ 49,986 $ 50,515 Statements of Cash Flows For the Year Ended December 31, Year 2 FIFO LIFO Weighted Average $ 17,224 % Cash flows from operating activities Cash outflow for income tax Cash outflow for inventory Cash inflow from customers Cash outflow for salaries expense 17,224 0 0 Net cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Net change in cash Plus: Beginning cash balance Ending cash balance 17,224 0 0 $ 17,224 $ 0 $ 0
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