Following is partial information for the income statement of Audio Solutions Company under three different inventory costing methods, assuming the use of a periodic inventory system:

Required:
1. Compute cost of goods sold under the FIFO, LIFO, and average cost inventory costing methods.
2. Prepare an income statement through pretax income for each method.
3. Rank the three methods in order of income taxes paid (favorable cash flow) and explain the basis for yourranking.

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FIFO LIFO Average Cost Cost of goods sold Beginning inventory (400 units) Purchases (475 units) $11,200 S11,200 16,625 16,625 S11,200 16,625 Goods available for sale Ending inventory (525 units) Cost of goods sold Sales, 350 units; unit sales price, $50 Expenses, S1,700