The accounting records of Wall's China Shop reflected the following balances as of January 1, Year 2. Cash $ 16,900 Begi
Posted: Tue Jul 05, 2022 1:35 pm
The accounting records of Wall's China Shop reflected thefollowing balances as of January 1, Year 2.
Cash $ 16,900Beginning inventory 13,775 (145 units @ $95)Common stock 15,200Retained earnings 15,475
The following five transactions occurred in Year2:First purchase (cash): 120 units @ $97Second purchase (cash): 200 units @ $105Sales (all cash): 425 units @ $189Paid $13,300 cash for salaries expensesPaid cash for income tax at the rate of 40 percent of income beforetaxesRequireda. Compute the cost of goods sold and ending inventory, assuming(1) FIFO cost flow, (2) LIFO cost flow, and (3) weighted-averagecost flow. Compute the income tax expense for each method.b. Record the above transactions in general journal form and postto T-accounts assuming each of the cost flows listed.Assume perpetual inventory system is used.1. FIFO2. LIFO3. Weighted Averagec. Use a vertical model to show the Year 2 income statement,balance sheet, and statement of cash flows under FIFO, LIFO, andweighted average.
Cash $ 16,900Beginning inventory 13,775 (145 units @ $95)Common stock 15,200Retained earnings 15,475
The following five transactions occurred in Year2:First purchase (cash): 120 units @ $97Second purchase (cash): 200 units @ $105Sales (all cash): 425 units @ $189Paid $13,300 cash for salaries expensesPaid cash for income tax at the rate of 40 percent of income beforetaxesRequireda. Compute the cost of goods sold and ending inventory, assuming(1) FIFO cost flow, (2) LIFO cost flow, and (3) weighted-averagecost flow. Compute the income tax expense for each method.b. Record the above transactions in general journal form and postto T-accounts assuming each of the cost flows listed.Assume perpetual inventory system is used.1. FIFO2. LIFO3. Weighted Averagec. Use a vertical model to show the Year 2 income statement,balance sheet, and statement of cash flows under FIFO, LIFO, andweighted average.