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 $18,400 14,105 (155 units @ $91) 16,000 16,505 The following five transactions occurred in Year 2: 1. First purchase (cash) 120 units @ $93 2. Second purchase (cash) 195 units @ $101 3. Sales (all cash) 420 units @ $197 4. Paid $16,300 cash for salaries expenses. 5. Paid cash for income tax at the rate of 40 percent of income before taxes. 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.
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 $18,400 14,105 (155 units @ $91) 16,000 16,505 The following five transactions occurred in Year 2: 1. First purchase (cash) 120 units @ $93 2. Second purchase (cash) 195 units @ $101 3. Sales (all cash) 420 units @ $197 4. Paid $16,300 cash for salaries expenses. 5. Paid cash for income tax at the rate of 40 percent of income before taxes. 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.
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 56P: The following selected information is taken from the financial statements of Arnn Company for its...
Related questions
Question
![The accounting records of Wall's China Shop reflected the following balances as of January 1, Year 2:
$18,400
14,105 (155 units @ $91)
16,000
16,505
Cash
Beginning inventory
Common stock
Retained earnings
The following five transactions occurred in Year 2:
1. First purchase (cash) 120 units @ $93
2. Second purchase (cash) 195 units @ $101
3. Sales (all cash) 420 units @ $197
4. Paid $16,300 cash for salaries expenses.
5. Paid cash for income tax at the rate of 40 percent of income before taxes.
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.
Record the above transactions in general journal form and post to T-accounts assuming (1) FIFO cost flow, (2) LIFO cost flow, and (3)
weighted-average cost flow. Assume perpetual inventory system is used.
1. FIFO
2. LIFO
3. Weighted Average
Use a vertical model to show the Year 2 income statement, balance sheet, and statement of cash flows under FIFO, LIFO, and
weighted average.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F53a9342a-3958-4c5f-848a-17778d9309f0%2F747fc9d4-f4ce-49c5-a3ca-b8d772ae72f9%2F69fuh1i_processed.png&w=3840&q=75)
Transcribed Image Text:The accounting records of Wall's China Shop reflected the following balances as of January 1, Year 2:
$18,400
14,105 (155 units @ $91)
16,000
16,505
Cash
Beginning inventory
Common stock
Retained earnings
The following five transactions occurred in Year 2:
1. First purchase (cash) 120 units @ $93
2. Second purchase (cash) 195 units @ $101
3. Sales (all cash) 420 units @ $197
4. Paid $16,300 cash for salaries expenses.
5. Paid cash for income tax at the rate of 40 percent of income before taxes.
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.
Record the above transactions in general journal form and post to T-accounts assuming (1) FIFO cost flow, (2) LIFO cost flow, and (3)
weighted-average cost flow. Assume perpetual inventory system is used.
1. FIFO
2. LIFO
3. Weighted Average
Use a vertical model to show the Year 2 income statement, balance sheet, and statement of cash flows under FIFO, LIFO, and
weighted average.
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 6 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
![Managerial Accounting: The Cornerstone of Busines…](https://www.bartleby.com/isbn_cover_images/9781337115773/9781337115773_smallCoverImage.gif)
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
![College Accounting, Chapters 1-27](https://www.bartleby.com/isbn_cover_images/9781337794756/9781337794756_smallCoverImage.gif)
College Accounting, Chapters 1-27
Accounting
ISBN:
9781337794756
Author:
HEINTZ, James A.
Publisher:
Cengage Learning,
![College Accounting, Chapters 1-27 (New in Account…](https://www.bartleby.com/isbn_cover_images/9781305666160/9781305666160_smallCoverImage.gif)
College Accounting, Chapters 1-27 (New in Account…
Accounting
ISBN:
9781305666160
Author:
James A. Heintz, Robert W. Parry
Publisher:
Cengage Learning
![Managerial Accounting: The Cornerstone of Busines…](https://www.bartleby.com/isbn_cover_images/9781337115773/9781337115773_smallCoverImage.gif)
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
![College Accounting, Chapters 1-27](https://www.bartleby.com/isbn_cover_images/9781337794756/9781337794756_smallCoverImage.gif)
College Accounting, Chapters 1-27
Accounting
ISBN:
9781337794756
Author:
HEINTZ, James A.
Publisher:
Cengage Learning,
![College Accounting, Chapters 1-27 (New in Account…](https://www.bartleby.com/isbn_cover_images/9781305666160/9781305666160_smallCoverImage.gif)
College Accounting, Chapters 1-27 (New in Account…
Accounting
ISBN:
9781305666160
Author:
James A. Heintz, Robert W. Parry
Publisher:
Cengage Learning
![Survey of Accounting (Accounting I)](https://www.bartleby.com/isbn_cover_images/9781305961883/9781305961883_smallCoverImage.gif)
Survey of Accounting (Accounting I)
Accounting
ISBN:
9781305961883
Author:
Carl Warren
Publisher:
Cengage Learning
![College Accounting (Book Only): A Career Approach](https://www.bartleby.com/isbn_cover_images/9781305084087/9781305084087_smallCoverImage.gif)
College Accounting (Book Only): A Career Approach
Accounting
ISBN:
9781305084087
Author:
Cathy J. Scott
Publisher:
Cengage Learning
![Financial Accounting](https://www.bartleby.com/isbn_cover_images/9781337272124/9781337272124_smallCoverImage.gif)
Financial Accounting
Accounting
ISBN:
9781337272124
Author:
Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:
Cengage Learning