Following is partial information for the statement of earnings of Timber Company under two different inventory costing methods, assuming the use of a periodic inventory system:

Required:
1. Compute the cost of sales under the FIFO and weighted- average inventory costing methods.
2. Prepare a statement of earnings through pretax earnings for each method.
3. Rank the two methods with regard to favourable cash flow, and explain the basis for your ranking.

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FIFO Weighted Average Unit sales price, $50 Cost of sales Beginning inventory (400 units) Purchases (475 units) $13,600 17,100 $13,600 17,100 Cost of goods available for sale Ending inventory (545 units) Cost of sales Operating expenses 1.700 1.700