Req B1 The accounting records of Walls China Shop reflected the following balances as of...

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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

Cash	$ 19,200
Beginning inventory	19,140	(220 @ $87)
Common stock	14,400
Retained earnings	23,940

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.)

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