Reference no: EM132894872

Question - The accounting records of Wall's China Shop reflected the following balances as of January 1, 2018:

Cash $17,400

Beginning inventory 17,850 (210 units @ $85)

Common stock 15,400

Retained earnings 19,850

The following five transactions occurred in 2018:

1. First purchase (cash) 120 units @ $87

2. Second purchase (cash) 200 units @ $95

3. Sales (all cash) 360 units @ $192

4. Paid $14,450 cash for salaries expense

5. Paid cash for income tax at the rate of 25 percent of income before taxes

Required -

1. 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.

2. Use a vertical model to show the 2018 income statement, balance sheet, and statement of cash flows under FIFO, LIFO, and weighted average.