Req B1 The accounting records of Walls China Shop reflected the following balances as of...
50.1K
Verified Solution
Link Copied!
Question
Accounting
Req B1
The accounting records of Walls China Shop reflected the following balances as of January 1, Year 3:
Cash
$ 19,200
Beginning inventory
19,140
(220 @ $87)
Common stock
14,400
Retained earnings
23,940
The following five transactions occurred in Year 3:
First purchase (cash): 120 units @ $89
Second purchase (cash): 200 units @ $97
Sales (all cash): 370 units @ $197
Paid $13,250 cash for salaries expense
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-1. Use a vertical model to show the Year 3 income statement under FIFO, LIFO, and weighted average. (Hint: Record the events under an accounting equation before preparing the statements.)
b-2. Use a vertical model to show the Year 3 balance sheet under FIFO, LIFO, and weighted average. (Hint: Record the events under an accounting equation before preparing the statements.)
b-3. Use a vertical model to show the Year 3 statement of cash flows under FIFO, LIFO, and weighted average. (Hint: Record the events under an accounting equation before preparing the statements.)
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
