Question
The accounting records of Walls China Shop reflected the following balances as of January 1, Year 3: Cash $ 17,400 Beginning inventory 18,060 (210 @
The accounting records of Walls China Shop reflected the following balances as of January 1, Year 3:
Cash | $ | 17,400 | ||
Beginning inventory | 18,060 | (210 @ $86) | ||
Common stock | 16,000 | |||
Retained earnings | 19,460 | |||
The following five transactions occurred in Year 3:
- First purchase (cash): 125 units @ $88
- Second purchase (cash): 200 units @ $96
- Sales (all cash): 365 units @ $194
- Paid $15,500 cash for salaries expense
- 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. Compute the income tax expense for each method. b. Use a vertical model to show the Year 3 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.)
Complete this question by entering your answers in the tabs below. Required A Required B1 Required B2 Required B3 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. (Do not round intermediate calculations. Round your answers to nearest whole dollar amount.) FIFO LIFO Weighted Average Cost of goods sold Ending inventoryStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started