The accounting records of Wall's China Shop reflected the following balances as of January 1, Year 2:- **Cash**: $16,800- **Beginning inventory**: $17,600 (200 units @ $88)- **Common stock**: $15,700- **Retained earnings**: $18,700The following five transactions occurred in Year 2:1. First purchase (cash): 120 units @ $902. Second purchase (cash): 205 units @ $983. Sales (all cash): 350 units @ $1974. Paid $13,950 cash for salaries expense5. 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.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.)***Instructions:**- Enter answers in the tabs below: Req A, Req B1, Req B2, Req B3.**Detailed Explanation:**- **Cost of Goods Sold and Ending Inventory:** 1. **FIFO (First-In, First-Out):** Calculate the cost using the earliest purchased goods first. 2. **LIFO (Last-In, First-Out):** Calculate the cost using the most recently purchased goods first. 3. **Weighted Average:** Calculate the cost based on the average cost of all available inventory.**Graphical/Tabular Explanation:**The table is split into sections for FIFO, LIFO, and Weighted Average, where calculations for the cost of goods sold and ending inventory are required. The table features input fields for:- **FIFO Cost of Goods Sold and Ending Inventory**- **LIFO Cost of Goods Sold and Ending Inventory**- **Weighted Average Cost of Goods Sold and Ending Inventory****Note:** Round all answers to the nearest whole dollar amount. **Accounting Exercise for Wall's China Shop****Required Tasks:**a. Calculate the cost of goods sold and ending inventory, using the following methods: 1. FIFO (First-In, First-Out) cost flow 2. LIFO (Last-In, First-Out) cost flow 3. Weighted-average cost flowb. Utilize a vertical model to present the Year 2 income statement, balance sheet, and statement of cash flows for FIFO, LIFO, and weighted average. *(Hint: First record the events under an accounting equation before preparing the statements.)***Instructions:**Complete this exercise by entering your responses using the tabs provided below:- Req A- Req B1- Req B2- Req B3Use the vertical model format to display the Year 2 income statement under FIFO, LIFO, and weighted average methods. *(Avoid rounding intermediate calculations. Round final answers to the nearest whole dollar amount.)***WALL'S CHINA SHOP****Income Statements***For the Year Ended December 31, Year 2*| | FIFO | LIFO | Weighted Average ||-------------------|------|------|------------------|| | | | || | | | || Salaries Expense | | | || Income Before Tax | | | |**Navigation:**- Use "Req A" to proceed to Requirement A.- Use "Req B2" to proceed to Requirement B2.

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

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 @ $90 2. Second purchase (cash) 205 units @ $98 3. Sales (all cash) 350 units @ $197 4. Paid $13,950 cash for salaries expense 5. Paid cash for income tax at the rate of 25 percent of income before taxes Required $16, 800 17,600 (200 units @ $88) 15,700 18,700 a. Compute the cost of goods sold and ending inventory, assuming (1) FIFO cost flow, (2) LIFO cost flow, and (3) weighted-average cos 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.) Complete this question by entering your answers in the tabs below. Req A Req B1 Cost of goods sold Ending inventory Req B2 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.) FIFO Req 83 LIFO Weighted Average Reg A Req B1 >

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q