The accounting records of Wall's China Shop reflected the following balances as of January 1, Year 2. Cash Beginning inventory Common stock Retained earnings $ 19,600 12,615 (145 units @ $87) 14,400 17,815 The following five transactions occurred in Year 2: 1. First purchase (cash): 115 units @ $89 2. Second purchase (cash): 200 units @ $97 3. Sales (all cash): 420 units @ $189 4. Paid $16,550 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. Sales Cost of goods sold Gross margin Salaries expense Income before tax Income tax expense Net income Assets Cash Inventory Total assets Stockholders' equity WALL'S CHINA SHOP Income Statements For Year Ended December 31, Year 2 FIFO 0 Weighted LIFO Average 0 0 0 $ 0 $ 0 $ 0 WALL'S CHINA SHOP Balance Sheets As of December 31, Year 2 FIFO LIFO Weighted Average $ 0 $ 0 $ Common stock Retained earnings Total stockholders' equity $ 0 $ 0 $ 0 WALL'S CHINA SHOP Statements of Cash Flows For the Year Ended December 31, Year 2 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 FIFO 0 LIFO Weighted Average 0 0 0 0 $ 0 $ 0 $ 0