The accounting records of Wall's China Shop reflected the following balances as of January 1, Year...

60.1K

Verified Solution

Question

Accounting

The accounting records of Wall's China Shop reflected thefollowing balances as of January 1, Year 2: Cash $ 18,500 Beginninginventory 13,800 (150 units @ $92) Common stock 15,000 Retainedearnings 17,300 The following five transactions occurred in Year 2:First purchase (cash) 120 units @ $94 Second purchase (cash) 200units @ $102 Sales (all cash) 425 units @ $186 Paid $15,650 cashfor salaries expenses. Paid cash for income tax at the rate of 40percent of income before taxes. Required a. Compute the cost ofgoods sold and ending inventory, assuming (1) FIFO cost flow, (2)LIFO cost flow, and (3) weighted-average cost flow. Compute theincome tax expense for each method. b. Record the abovetransactions in general journal form and post to T-accountsassuming (1) FIFO cost flow, (2) LIFO cost flow, and (3)weighted-average cost flow. Assume perpetual inventory system isused. 1. FIFO 2. LIFO 3. Weighted Average c. Use a vertical modelto show the Year 2 income statement, balance sheet, and statementof cash flows under FIFO, LIFO, and weighted average.

Answer & Explanation Solved by verified expert

3.8 Ratings (391 Votes)

Please hit LIKE button if thishelped For any further explanation please put your query incomment will get back to youPart aQuantityRateTotal CostBeginning Inventory1509213800First Purchase1209411280Second Purchase20010220400SaleEnding InventoryFIFOFIFOBeginning Inventory1509213800First Purchase1209411280Second Purchase15510215810451024590Cost of Goods Sold408904590LIFOLIFOSecond Purchase20010220400First Purchase1209411280Beginning Inventory10592966045924140Cost of Goods Sold413404140Weighted AverageQuantityRateTotal CostWeighted AverageBeginning Inventory1509213800First See Answer

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!

Become a Member

Transcribed Image Text

The accounting records of Wall's China Shop reflected thefollowing balances as of January 1, Year 2: Cash $ 18,500 Beginninginventory 13,800 (150 units @ $92) Common stock 15,000 Retainedearnings 17,300 The following five transactions occurred in Year 2:First purchase (cash) 120 units @ $94 Second purchase (cash) 200units @ $102 Sales (all cash) 425 units @ $186 Paid $15,650 cashfor salaries expenses. Paid cash for income tax at the rate of 40percent of income before taxes. Required a. Compute the cost ofgoods sold and ending inventory, assuming (1) FIFO cost flow, (2)LIFO cost flow, and (3) weighted-average cost flow. Compute theincome tax expense for each method. b. Record the abovetransactions in general journal form and post to T-accountsassuming (1) FIFO cost flow, (2) LIFO cost flow, and (3)weighted-average cost flow. Assume perpetual inventory system isused. 1. FIFO 2. LIFO 3. Weighted Average c. Use a vertical modelto show the Year 2 income statement, balance sheet, and statementof cash flows under FIFO, LIFO, and weighted average.