The accounting records of Walls China Shop reflected the following balances as of January 1,...
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Accounting
The accounting records of Walls China Shop reflected the following balances as of January 1, Year 2: Cash $ 16,000 Beginning inventory 17,850 (210 units @ $85) Common stock 14,400 Retained earnings 19,450 The following five transactions occurred in Year 2: First purchase (cash) 125 units @ $87 Second purchase (cash) 205 units @ $95 Sales (all cash) 365 units @ $193 Paid $16,900 cash for salaries expense Paid cash for income tax at the rate of 25 percent of income before taxes Required Compute the cost of goods sold and ending inventory, assuming (1) FIFO cost flow, (2) LIFO cost flow, and (3) weighted-average cost flow. 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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