HW2b //newconnect.mheducation.com/flow/connect.html Help The accounting records

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HW2b //newconnect.mheducation.com/flow/connect.html Help The accounting records of Wall's China Shop reflected the following balances as of January 1, Year 3: Cash $16,000 Beginning inventory 17,630 (205 units $86) Common stock 15,700 17,930 Retained earnings The following five transactions occurred in Year 3: 1. First purchase (cash): 125 units$88 2. Second purchase (cash): 200 units$96 3. Sales (all cash): 360 units$192 4. Paid $14,050 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 ( FIFO cost flow. 2) LiFO cost flow, and (3) weighted-average cost flow. Compute the income tax expense for each method. b. Use a vertical model to show the Year 3 income statement, balance sheet, and statement of cash flows under F 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. Required A Required B1 Required 82 Required B3 rane. (Do not round

Explanation / Answer

STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC FIFO METHOD RECIEPTS COST OF GOODS SOLD BALANCE DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ Balance Oct1 205 86 17630 205 86 17630 Purchasse First 125 88 11000 125 88 11000 Second 200 96 19200 30 96 2880 170 96 16320 TOTAL 530 47830 360 31510 170 16320 STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC LIFO METHOD RECIEPTS COST OF GOODS SOLD BALANCE DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ Balance Oct1 205 86 17630 35 86 3010 170 86 14620 Purchasse First 125 88 11000 125 88 11000 Second 200 96 19200 200 96 19200 TOTAL 530 47830 360 33210 170 14620 STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC WEIGHTED AVERAGE METHOD RECIEPTS COST OF GOODS SOLD BALANCE DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ Balance Oct1 205 86 17630 Purchasse First 125 88 11000 Second 200 96 19200 TOTAL 530 90.25 47830 360 90.25 32490 170 90.25 15340 Statement FIFO LIFO Average Sales 69120 69120 69120 Less: Cost of goods sold 31510 33210 32490 Gross margin 37610 35910 36630 Less: Salries expenses 14050 14050 14050 Net income before tax 23560 21860 22580 Tax @ 25% 5890 5465 5645 Req b: FIFO LIFO Average Cash flows from Operating activities Cashflows from customers 69120 69120 69120 Cashflows for inventory -30200 -30200 -30200 Cash outflow for salaries -14050 -14050 -14050 Cash outflows from taxes -5890 -5465 -5645 Net cash flows from operating activities 18980 19405 19225 Cashflows from investing activities 0 0 0 Cashflows from financing activities 0 0 0 Net change in cash 18980 19405 19225 Add: Beginning balance in csh 16000 16000 16000 Ending balance of cash 34980 35405 35225

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