Problem 5-19A (Algo) Effect of different inventory cost flow methods on financial statements LO 5-1 The accounting records of Walls China Shop reflected the following balances as of January 1, Year 3: Cash $ 16,000 Beginning inventory 20,240 (220 @ $92) Common stock 14,700 Retained earnings 21,540 The following five transactions occurred in Year 3: First purchase (cash): 125 units @ $94 Second purchase (cash): 200 units @ $102 Sales (all cash): 375 units @ $199 Paid $16,700 cash for salaries expense Paid cash for income tax at the rate of 25 percent of income before taxes

Problem 5-19A (Algo) Effect of different inventory cost flow methods on financial statements LO 5-1 The accounting records of Wall's China Shop reflected the following balances as of January 1, Year 3: The following five transactions occurred in Year 3: 1. First purchase (cash): 125 units @ \$94 2. Second purchase (cash): 200 units @ \$102 3. Sales (all cash): 375 units @ \$199 4. Paid $16,700 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-1. Use a vertical model to show the Year 3 income statement under FIFO, LIFO, and weighted average. (Hint. Record the events under an accounting equation before preparing the statements.) b-2. Use a vertical model to show the Year 3 balance sheet under FIFO, LIFO, and weighted average. (Hint. Record the events under an accounting equation before preparing the statements.) b-3. Use a vertical model to show the Year 3 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. Complete this question by entering your answers in the tabs below. Compute the cost of goods sold and ending inventory, assuming (1) FIFO cost flow, (2) LIFO cost flow, and (3) weightedaverage cost flow. Compute the income tax expense for each method. Note: Do not round intermediate calculations. Round your answers to nearest whole dollar amount. Use a vertical model to show the Year 3 income statement under FIFO, LIFO, and weighted average. (Hint: Record the events under an accounting equation before preparing the statements.) Note: Do not round intermediate calculations. Round your answers to nearest whole dollar amount. Use a vertical model to show the Year 3 balance sheet under FIFO, LIFO, and weighted average. (Hint: Record the events under an accounting equation before preparing the statements.) Note: Do not round intermediate calculations. Round your answers to nearest whole dollar amount. Use a vertical model to show the Year 3 statement of cash flows under FIFO, LIFO, and weighted average. (Hint: Record the events under an accounting equation before preparing the statements.) Note: Do not round intermediate calculations. Round your answers to nearest whole dollar amount. Cash outflows should be indicated by a minus sign