The accounting records of Walls China Shop reflected the following balances as of January 1, Year 2 DCashBeginning inventoryCommon stockRetained earnings$ 19,50012,470 (145 units @ $86)14,20017,770The following five transactions occurred in Year 2First purchase (cash): 115 units @ $88Second purchase (cash): 205 units @ $96Sales (all cash): 425 units @ $199Paid $16,150 cash for salaries expensesPaid cash for income tax at the rate of 40 percent of income before taxesRequiredflow. Compute the income tax expense for each method.Compute the cost of goods sold and ending inventory, assuming (1) FIFO cost flow. (2) LIFO cost flow, and (3) weighted-average costRecord the above transactions in general journal form and post to T-accounts assuming each of the cost flows listed. Assume perpetual inventory system is used.FIFOLFOWeighted Averagec. Use a vertical model to show the Year 2 income statement, balance sheet, and statement of cash flows under FIFO, LIFO, and weighted average.Please dont provide solution in an image format thank you

Inventory can be valued using various methods -First-in First-Out Method - Under the First-in…

Answered: The accounting records of Walls China…

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter5: Accounting For Retail Businesses

Section: Chapter Questions

Problem 41E: Cost of goods sold and related items The following data were extracted from the accounting records...

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The accounting records of Walls China Shop reflected the following balances as of January 1, Year 2 D

Cash

Beginning inventory

Common stock

Retained earnings

$ 19,500

12,470 (145 units @ $86)

14,200

17,770

The following five transactions occurred in Year 2

First purchase (cash): 115 units @ $88
Second purchase (cash): 205 units @ $96
Sales (all cash): 425 units @ $199
Paid $16,150 cash for salaries expenses
Paid cash for income tax at the rate of 40 percent of income before taxes

Required

flow. Compute the income tax expense for each method.

Compute the cost of goods sold and ending inventory, assuming (1) FIFO cost flow. (2) LIFO cost flow, and (3) weighted-average cost
Record the above transactions in general journal form and post to T-accounts assuming each of the cost flows listed. Assume perpetual inventory system is used.

FIFO
LFO
Weighted Average

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

Please dont provide solution in an image format thank you

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