The accounting records of Wall's China Shop reflected the following balances as of January 1, Year 2.

Cash	$ 19,000
Beginning inventory	13,795	(155 units @ $89)
Common stock	15,800
Retained earnings	16,995

The following five transactions occurred in Year 2:

1. First purchase (cash): 115 units @ $91

2. Second purchase (cash): 200 units @ $99

3. Sales (all cash): 420 units @ $191

4. Paid $16,200 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.

**Use a vertical model to show the Year 2 income statement, balance sheet, and statement of cash flows under FIFO, LIFO, and weighted average**

Income Statements
	FIFO	LIFO	Weighted Average
Sales
Cost of goods sold
Gross margin
Salaries expense
Income before tax
Income tax expense
Net income

Balance Sheets	FIFO	LIFO	Weighted Average
Assets
Cash
Inventory
Total assets	$	$	$
Stockholders' equity
Common stock
Retained earnings
Total stockholders' equity	$	$	$

Statement of Cash Flows	FIFO	LIFO	Weighted Average
Cash flows from operating activities
Cash inflow from customers
Cash outflow from inventory
Cash outflow for income tax
Cash outflow for salaries expense
Net cash flow from operating activities
Cash flows from investing activities
Cash flows from financing activities
Net change in cash
Plus: beginning cash balance
Ending cash balance