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

Cash	$	18,400
Beginning inventory		15,040	(160 units @ $94)
Common stock		14,000
Retained earnings		19,440

The following five transactions occurred in Year 2:

1. First purchase (cash) 120 units @ $96
2. Second purchase (cash) 200 units @ $104
3. Sales (all cash) 425 units @ $196
4. Paid $14,600 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 (income tax expense is 40% of operating net income before tax.)

For the weighted average calculations: unit prices should be rounded to three decimal places, e.g. if the unit price is $10.1234, you should use $10.123. The total cost of goods sold and ending inventory should be stated in whole dollars.

b. (this part has been omitted) c. Use a vertical model (see Exhibit 2.2, p. 78 for illustration) to show the Year 2 income statement, balance sheet, and statement of cash flows under FIFO, LIFO, and weighted average.

Complete this question by entering your answers in the tabs below.

• Required A
• Required C

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. (Round intermediate calculations to 3 decimal places. Round your final answers to the nearest whole dollar amount.)

	Cost of Goods Sold	Ending Inventory
FIFO
LIFO
Weighted Average
WALL's CHINA SHOP
Computation of Income Tax Expense and Net Income
	FIFO	LIFO	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. (Round intermediate calculations to 3 decimal places. Round your final answers to the nearest whole dollar amount. Amounts to be deducted and losses should be indicated with a minus sign.)

  WALLs CHINA SHOP
  Income Statements
  	FIFO	LIFO	Weighted Average
  WALL's CHINA SHOP
  Balance Sheets
  As of December 31, Year 2
  	FIFO	LIFO	Weighted Average
  Assets
  Total assets
  Stockholders' equity
  Total stockholders' equity
  WALL's CHINA SHOP
  Statements of Cash Flows
  For the Year Ended December 31, Year 2
  	FIFO	LIFO	Weighted Average
  Cash flows from operating activities
  Net cash flows from operating activities
  Cash flows from investing activities
  Cash flows from financing activities
  Net change in cash
  Ending cash balance