The accounting records of Walls China Shop reflected the following balances as of January 1, 2016: Cash
Question:
Cash ............ $80,100
Beginning inventory .... 33,000 (220 units @ $150)
Common stock ........... 50,000
Retained earnings ....... 63,100
The following five transactions occurred in 2016:
1. First purchase (cash) 150 units @ $155
2. Second purchase (cash) 160 units @ $160
3. Sales (all cash) 410 units @ $320
4. Paid $38,000 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, and
(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, and
(3) Weighted-average cost flow.
c. Use a vertical model to show the 2016 income statement, balance sheet, and statement of cash flows under FIFO, LIFO, and weighted average.
Ending Inventory
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 =...
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Related Book For
Fundamental Financial Accounting Concepts
ISBN: 978-0078025907
9th edition
Authors: Thomas Edmonds, Christopher Edmonds
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