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

Cash$18,900Beginning inventory12,325(145 units @ $85)Common stock14,200Retained earnings17,025

The following five transactions occurred in Year 2:

1. First purchase (cash) 120 units @ $87
2. Second purchase (cash) 195 units @ $95
3. Sales (all cash) 415 units @ $192
4. Paid $15,950 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 (1) FIFO cost flow, (2) LIFO cost flow, and (3) weighted-average cost flow. 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.