The accounting records of Wall's China Shop reflected the following balances as of January 1, Year 2. $ 19,600 13,050 (150 units @ $87) 15,700 16,950 Cash Beginning inventory Common stock Retained earnings The following five transactions occurred in Year 2: 1. First purchase (cash): 115 units @ $89 2. Second purchase (cash): 205 units @ $97 3. Sales (all cash): 425 units @ $185 4. Paid $14,950 cash for salaries expenses 5. Paid cash for income tax at the rate of 40 percent of income before taxes Required a. Compute the cost of goods sold and ending inventory, assuming (1) FIFO cost flow, (2) LIFO cost flo 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. $ 19,600 13,050 (150 units @ $87) 15,700 16,950 Cash Beginning inventory Common stock Retained earnings The following five transactions occurred in Year 2: 1. First purchase (cash): 115 units @ $89 2. Second purchase (cash): 205 units @ $97 3. Sales (all cash): 425 units @ $185 4. Paid $14,950 cash for salaries expenses 5. Paid cash for income tax at the rate of 40 percent of income before taxes Required a. Compute the cost of goods sold and ending inventory, assuming (1) FIFO cost flow, (2) LIFO cost flo 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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