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
$
16,100
Beginning inventory
18,060
(210 units @ $86)
Common stock
15,100
Retained earnings
19,060
The following five transactions occurred in Year 2:
First purchase (cash) 120 units @ $88
Second purchase (cash) 200 units @ $96
Sales (all cash) 360 units @ $199
Paid $14,100 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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