The records of Atlanta Aviation include the following accounts for inventory of aviation parts at July 31 of the current year:

Requirements

1. Prepare a partial income statement through gross profit under the average-cost, FIFO, and LIFO methods. Round average cost per unit to two decimal places and all other amounts to the nearest dollar.

2. Which inventory method would you use to minimize income tax? Explain why this method causes income tax to be the lowest.

Transcribed Image Text:

Inventory Aug 1 Balance 800 units @ $5.00 $ 4,000 3,400 56,000 5,600 Nov 5 Purchase 500 units @ $6.80 Jan 24 Apr 8 Purchase 8,000 units @ $7.00 Purchase 700 units @ $8.00 Sales Revenue Jul 31 9,090 units $128,169