Effect of LIFO on financial statements over several periods. Barnard Corporation commenced operations on January 2, Year 3. Its purchases and sales for its first five years of operations appear below.

Barnard Corporation uses a LIFO cost flow assumption. Ignore income taxes.

a. Compute the ending inventory for each of the five years.

b. Compute income for each of the five years.

c. Compute the ratio of income divided by sales for each of the five years.

d. Interpret the pattern of income-to-sales percentages computed in part c.

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Purchases Units Unit Cost Units Sales Unit Price Year 3 8,000 $4.00 6,000 $5.00 Year 4 11,000 4.40 8,200 5.50 Year 5 12,000 4.75 10,800 5.94 Year 6 15,000 5.32 17,200 6.65 Year 7 20,000 5.85 18,300 7.32