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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text: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 flow.
Compute the income tax expense for each method.
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