The accounting records of Wall's China Shop reflected the following balances as of January 1, 2018: $80,100 33,000 (220 units @ $150) 50,000 63,100 Cash Beginning inventory Common stock Retained earnings The following five transactions occurred in 2018: 1. First purchase (cash) 150 units @ $155 2. Second purchase (cash) 160 units @ $160 3. Sales (all cash) 410 units @ $320 4. Paid $38,000 cash for salaries expense 5. Paid 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. Compute the income tax expense for each method. b. Use a vertical model to show the 2018 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.) Complete this question by entering your answers in the tabs below. Req A Req B1 Req B2 Req B3 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. Weighted Average FIFO LIFO Cost of goods sold Ending inventory
The accounting records of Wall's China Shop reflected the following balances as of January 1, 2018: $80,100 33,000 (220 units @ $150) 50,000 63,100 Cash Beginning inventory Common stock Retained earnings The following five transactions occurred in 2018: 1. First purchase (cash) 150 units @ $155 2. Second purchase (cash) 160 units @ $160 3. Sales (all cash) 410 units @ $320 4. Paid $38,000 cash for salaries expense 5. Paid 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. Compute the income tax expense for each method. b. Use a vertical model to show the 2018 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.) Complete this question by entering your answers in the tabs below. Req A Req B1 Req B2 Req B3 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. Weighted Average FIFO LIFO Cost of goods sold Ending inventory
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:The accounting records of Wall's China Shop reflected the following balances as of January 1, 2018:
$80, 100
33,000 (220 units @ $150)
50,000
63,100
Cash
Beginning inventory
Common stock
Retained earnings
The following five transactions occurred in 2018:
1. First purchase (cash) 150 units @ $155
2. Second purchase (cash) 160 units @ $160
3. Sales (all cash) 410 units @ $320
4. Paid $38,000 cash for salaries expense
5. Paid 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. Compute the income tax expense for each method.
b. Use a vertical model to show the 2018 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.)
Complete this question by entering your answers in the tabs below.
Req A
Req B1
Req B2
Req B3
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.
Weighted
Average
FIFO
LIFO
Cost of goods sold
Ending inventory
< Req A
Req B1 >
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