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 0 0 Net cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Net change in cash 0 Ending cash balance $ 0 $ 0 $ 0 WALL'S CHINA SHOP Balance Sheets As of December 31, Year 3 FIFO LIFO LIE Weighted Average Assets Cash Inventory 0 $ 0 Total assets Stockholders' equity Common stock Retained earnings lyn Total stockholders' equity $ 0 $ 0 $ 0 WALL'S CHINA SHOP Income Statements For the Year Ended December 31, Year 3 FIFO L IFO Weighted Average Sales Cost of goods sold Gross margin Salaries expense Income before tax Income tax expenses Net income me alluulung records of Wall's China Shop reflected the following balances as of January 1 Year 3: Cash Beginning inventory Common stock Retained earnings $80,100 33,000 (220 $150) 50.000 63. 100 The following five transactions occurred in Year 3: 1. First purchase (cash): 150 units $155 2. Second purchase (cash): 160 units o $160 3. Sales (all cash): 410 units $320 4. Paid $38,000 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.)