The accounting records of Wall's China Shop reflected the following balances as of January 1,...
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Accounting
The accounting records of Wall's China Shop reflected the following balances as of January 1, 2018:
Cash$17,400
Beginning inventory17,850(210 units @ $85)Common stock15,400Retained earnings19,850
The following five transactions occurred in 2018:
First purchase (cash) 120 units @ $87
Second purchase (cash) 200 units @ $95
Sales (all cash) 360 units @ $192
Paid $14,450 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. Compute the income tax expense for each method.
Use a vertical model to show the 2018 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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