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

 

The following five transactions occurred in Year 2:

1. First purchase (cash) 115 units @ $87

2. Second purchase (cash) 205 units @ $95

3. Sales (all cash) 355 units @ $194

4. Paid $16,900 cash for salaries expense

5. Paid cash for income tax at the rate of 25 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.

b. Use a vertical model to show the Year 2 income statement, balance sheet, and statement of cash flows under FIFO, LIFO, and weighted average. (Hint: Record the events under an accounting equation before preparing the statements.)
 

Cash Beginning inventory Common stock Retained earnings $19,100 17,850 (210 units @ $85) 15,900 21,050