Question
The accounting records of Wall's China Shop reflected the following balances as of January 1, Year 2: Cash $ 19,000 Beginning inventory 14,570 (155 units
The accounting records of Wall's China Shop reflected the following balances as of January 1, Year 2: Cash $ 19,000 Beginning inventory 14,570 (155 units @ $94) Common stock 15,000 Retained earnings 18,570 The following five transactions occurred in Year 2: First purchase (cash) 125 units @ $96 Second purchase (cash) 200 units @ $104 Sales (all cash) 430 units @ $186 Paid $14,850 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 gross margin for each method.
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