Separating operating margin from holding gains. On January 1, the merchandise inventory of Giles Computer Store comprised 200 units acquired for $300 each. Dur- ing the year, the firm acquired 2,500 additional units at an average price of $400 each and sold 2,300 units for $800 each. The replacement cost of these units at the time they were sold averaged $400 during the year. The replacement cost of units on De- cember 31 was $500 per unit.

a. Calculate cost of goods sold under both FIFO and LIFO cost flow assumptions. h. Prepare partial income statements showing gross margin on sales as revenues less cost of goods sold under both FIFO and LIFO cost flow assumptions.

e. Prepare partial income statements, separating the gross margin on sales into oper- ating margins and realized holding gains, under both FIFO and LIFO.

d. Append to the bottom of the statements prepared in part e a statement showing the amount of unrealized holding gains and the total of realized income plus unreal- ized holding gains.

e. If you did the previous steps correctly, the totals in part d are the same for both FIFO and LIFO. Is this equality a coincidence? Why or why not?(Appendix)