The accounting records of Wall's China Shop reflected the following balances as of January 1, Year 2:CashBeginning inventoryCommon stockRetained earningsThe following five transactions occurred in Year 2:1. First purchase (cash) 120 units @ $882. Second purchase (cash) 205 units @ $963. Sales (all cash) 355 units @ $1864. Pald $13,400 cash for salaries expense5. Pald cash for Income tax at the rate of 25 percent of Income before taxesRequireda. Compute the cost of goods sold and ending Inventory, assuming (1) FIFO cost flow, (2) LIFO cost flow, and (3) weighted-average costflow.b. Use a vertical model to show the Year 2 Income statement, balance sheet, and statement of cash flows under FIFO, LIFO, andweighted average. (Hint: Record the events under an accounting equation before preparing the statements.)$18,80017,630 (205 units @ $86)14,60021,830Complete this question by entering your answers in the tabs below.Req AReq B1Cost of goods soldEnding inventoryFIFOReq 82Compute the cost of goods sold and ending inventory, assuming (1) FIFO cost flow, (2) LIFO cost flow, and (3)weighted-average cost flow. (Do not round intermediate calculations. Round your answers to nearest whole dollaramount.)Req B3LIFOWeightedAverage< Req AReq B1 >

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Description: The accounting records of Wall's China Shop reflected the following balances as of January 1, Year 2:CashBeginning inventoryCommon stockRetained earningsThe following five transactions occurred in Year 2:1. First purchase (cash) 120 units @ $882. Se

An income statement is a financial report that indicates the revenue and expenses of a business. It…

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inventory ck arnings $18,800 17,630 (285 units @ $86) 14,600 21,830 ng five transactions occurred in Year 2: thase (cash) 120 units @ $88 purchase (cash) 205 units @ $96 cash) 355 units @ $186 400 cash for salaries expense

inventory ck arnings $18,800 17,630 (285 units @ $86) 14,600 21,830 ng five transactions occurred in Year 2: thase (cash) 120 units @ $88 purchase (cash) 205 units @ $96 cash) 355 units @ $186 400 cash for salaries expense

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.

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Question

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The accounting records of Wall's China Shop reflected the following balances as of January 1, Year 2:
Cash
Beginning inventory
Common stock
Retained earnings
The following five transactions occurred in Year 2:
1. First purchase (cash) 120 units @ $88
2. Second purchase (cash) 205 units @ $96
3. Sales (all cash) 355 units @ $186
4. Pald $13,400 cash for salaries expense
5. Pald cash for Income tax at the rate of 25 percent of Income before taxes
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.
b. Use a vertical model to show the Year 2 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.)
$18,800
17,630 (205 units @ $86)
14,600
21,830
Complete this question by entering your answers in the tabs below.
Req A
Req B1
Cost of goods sold
Ending inventory
FIFO
Req 82
Compute the cost of goods sold and ending inventory, assuming (1) FIFO cost flow, (2) LIFO cost flow, and (3)
weighted-average cost flow. (Do not round intermediate calculations. Round your answers to nearest whole dollar
amount.)
Req B3
LIFO
Weighted
Average
< Req A
Req B1 >

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