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The accounting records of Walls China Shop reflected the following balances as of January 1, Year 2: Cash $ 19,700 Beginning inventory 17,200 (200 units

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

Cash $

19,700

Beginning inventory 17,200 (200 units @ $86)
Common stock 14,200
Retained earnings

22,700

The following five transactions occurred in Year 2:

  1. First purchase (cash) 115 units @ $88
  2. Second purchase (cash) 195 units @ $96
  3. Sales (all cash) 345 units @ $196
  4. Paid $14,200 cash for salaries expense
  5. Paid cash for income tax at the rate of 25 percent of income before taxes

Required

  1. Compute the cost of goods sold and ending inventory, assuming (1) FIFO cost flow, (2) LIFO cost flow, and (3) weighted-average cost flow.
  2. 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.)

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