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The accounting records of Wall's China Shop reflected the following balances as of January 1, Year 2: $18,000 Cash Beginning inventory Common stock Retained earnings
The accounting records of Wall's China Shop reflected the following balances as of January 1, Year 2: $18,000 Cash Beginning inventory Common stock Retained earnings 14,250 (150 units $95) 15,600 16,650 The following five transactions occurred in Year 2: 1. First purchase (cash) 115 units@ $97 2. Second purchase (cash) 205 units @ $105 3. Sales (all cash) 425 units @ $192 4. Paid $16,950 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 methoo 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
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