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.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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