Periodic and Perpetual Inventory Systems On November |, Howard Retailers had in inventory 1,000 toasters that had been purchased for $6 each. On November 10, Howard Retailers purchased 10,000 new toasters costing

$85,000 and paid freight charges of $7,000. Howard Retailers sold 800 toasters between November 1 and November 10, and another 7,700 were sold during the remainder of the month. The toasters sell for $14 each.

a. Assume Howard Retailers uses a perpetual inventory system, keeping track of its cost of goods sold at the time of each transaction. Show the computation of gross profit for Howard Retailers for November if the company costs its inventory using (1) LIFO; (2) FIFO.

b. Assume Howard Retailers uses a periodic inventory system, computing its cost of goods sold only at the end of the month. Show the computation of gross profit for Howard Retailers for November if the company costs its inventory using (1) LIFO; (2) FIFO.