The accounting records of Walls China Shop reflected the following balances as of January 1, Year 3:

Cash	$	19,000
Beginning inventory		18,245		(205 @ $89)
Common stock		14,600
Retained earnings		22,645

The following five transactions occurred in Year 3:

1. First purchase (cash): 120 units @ $91
2. Second purchase (cash): 200 units @ $99
3. Sales (all cash): 355 units @ $186
4. Paid $15,750 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. 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.)

Use a vertical model to prepare the Year 3 income statement under FIFO, LIFO, and weighted average. (Do not round intermediate calculations. Round your answers to nearest whole dollar amount.)

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 inventory

WALL'S CHINA SHOP
Income Statements
For the Year Ended December 31, Year 3
	FIFO	LIFO	Weighted Average
Salaries expense
Income before tax

Use a vertical model to prepare the Year 3 balance sheet under FIFO, LIFO, and weighted average. (Do not round intermediate calculations. Round your answers to nearest whole dollar amount.)

WALL'S CHINA SHOP
Balance Sheets
As of December 31, Year 3
	FIFO	LIFO	Weighted Average
Assets
Total assets
Stockholders' equity
Total stockholders' equity

Use a vertical model to prepare the Year 3 statement of cash flows under FIFO, LIFO, and weighted average. (Do not round intermediate calculations. Round your answers to nearest whole dollar amount. Amounts to be deducted should be indicated with a minus sign.)

WALL'S CHINA SHOP
Statements of Cash Flows
For the Year Ended December 31, Year 3
	FIFO	LIFO	Weighted Average
Cash flows from operating activities
Net cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Net change in cash
Ending cash balance