The accounting records of Carrols Lamp Shop reflected the following balances as of January 1, 2013: Cash
Question:
The accounting records of Carrol’s Lamp Shop reflected the following balances as of January 1, 2013:
Cash ...............$90,500
Beginning inventory ........ 28,000 (200 units @ $140)
Common stock ........... 40,000
Retained earnings .......... 78,500
The following five transactions occurred in 2013:
1. First purchase (cash) .........120 units @ $150
2. Second purchase (cash) .......140 units @ $160
3. Sales (all cash) ...........400 units @ $320
4. Paid $40,000 cash for salaries expense.
5. 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,
(3) Weighted-average cost flow. Compute the income tax expense for each method.
b. Record the five transactions in general journal form and post to T-accounts assuming (1) FIFO cost flow,
(2) LIFO cost flow,
(3) Weighted-average cost flow.
c. Use a vertical model to show the 2013 income statement, balance sheet, and statement of cash flows under FIFO, LIFO, and weighted average.
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =...
Step by Step Answer:
Fundamental financial accounting concepts
ISBN: 978-0078025365
8th edition
Authors: Thomas P. Edmonds, Frances M. Mcnair, Philip R. Olds, Edward