Question

The accounting records of Wall's China Shop reflected the following balances as of January 1, 2016:

   

Cash	$19,100
Beginning inventory	14,260	(155 units @ $92)
Common stock	15,000
Retained earnings	18,360

   

The following five transactions occurred in 2016:
1.	First purchase (cash) 120 units @ $94
2.	Second purchase (cash) 205 units @ $102
3.	Sales (all cash) 425 units @ $186
4.	Paid $15,100 cash for salaries expenses.
5.	Paid cash for income tax at the rate of 40 percent of income before taxes.

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. Assume perpetual inventory system is used. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round intermediate calculations to 3 decimal places. Round your final answers to the nearest whole dollar amount.)

Answer 1

	No of Units	Per unit	Cost of Goods Sold	Ending Inventory
FIFO	425		40840	5610	(155*92,120*94,150*102)
LIFO	425		41390	5060	(205*102,120*94,100*92)
Weighted Average	425		41127.60	5322.40	((14260+(120*94)+(205*102))/(155+120+205)
					14260
					11280
					20910
					46450	96.77083
Journal Entry		FIFO
1	Merchandise Inventory	11280
	To Cash		11280
2	Merchandise Inventory	20910
	To Cash		20910
3	Cash	79050
	To Sales		79050
	Cost of Goods Sold	$40,840
	To Merchandise Inventory		$40,840
4	Salaries Expense	$15,100
	To Cash		$15,100
5	Income Tax Expense	9244
	To Cash		9244
	(79050-40840-15100)*40%
Merchandise Inventory
Op Bal	$14,260	3	$40,840
1)	$11,280
2)	$20,910	End Bal	5610
	$46,450		$46,450
Cash
Op Bal	$19,100	1)	$11,280
3)	79050	2)	$20,910
		4)	$15,100
		5)	$9,244
		End Bal	$41,616
	$98,150		$98,150
Sales
		3)	79050
End Bal	79050
	79050		79050
Salaries Expense
4)	$15,100
		End Bal	$15,100
	$15,100		$15,100
Income Tax Expense
5)	$9,244
		End Bal	$9,244
	$9,244		$9,244
Cost of Goods Sold
3	$40,840
		End Bal	$40,840
	$40,840		$40,840
Journal Entry		LIFO
1	Merchandise Inventory	11280
	To Cash		11280
2	Merchandise Inventory	20910
	To Cash		20910
3	Cash	79050
	To Sales		79050
	Cost of Goods Sold	$41,390
	To Merchandise Inventory		$41,390
4	Salaries Expense	$15,100
	To Cash		$15,100
5	Income Tax Expense	9024
	To Cash		9024
	(79050-41390-15100)*40%
Merchandise Inventory
Op Bal	$14,260	3	$41,390
1)	$11,280
2)	$20,910	End Bal	5060
	$46,450		$46,450
Cash
Op Bal	$19,100	1)	$11,280
3)	79050	2)	$20,910
		4)	$15,100
		5)	$9,024
		End Bal	$41,836
	$98,150		$98,150
Sales
		3)	79050
End Bal	79050
	79050		79050
Salaries Expense
4)	$15,100
		End Bal	$15,100
	$15,100		$15,100
Income Tax Expense
5)	$9,244
		End Bal	$9,244
	$9,244		$9,244
Cost of Goods Sold
3	$41,390
		End Bal	$41,390
	$41,390		$41,390
Journal Entry		Weighted Average
1	Merchandise Inventory	11280
	To Cash		11280
2	Merchandise Inventory	20910
	To Cash		20910
3	Cash	79050
	To Sales		79050
	Cost of Goods Sold	$41,128
	To Merchandise Inventory		$41,128
4	Salaries Expense	$15,100
	To Cash		$15,100
5	Income Tax Expense	9128.8
	To Cash		9128.8
	(79050-41128-15100)*40%
Merchandise Inventory
Op Bal	$14,260	3	$41,128
1)	$11,280
2)	$20,910	End Bal	5322
	$46,450		$46,450
Cash
Op Bal	$19,100	1)	$11,280
3)	79050	2)	$20,910
		4)	$15,100
		5)	$9,129
		End Bal	$41,731
	$98,150		$98,150
Sales
		3)	79050
End Bal	79050
	79050		79050
Salaries Expense
4)	$15,100
		End Bal	$15,100
	$15,100		$15,100
Income Tax Expense
5)	$9,244
		End Bal	$9,244
	$9,244		$9,244
Cost of Goods Sold
3	$41,128
		End Bal	$41,128
	$41,128		$41,128