Continuation of preceding problem introducing current cost concepts. (Do not attempt this problem until you have worked Problem 39.) Assume the same data for Hartison Corporation as given in the previous problem. In addition, assume the following:

Selling Price per Unit Year 1 $18 Year 2 24 Average Current Replacement Cost Year 1 $12 Year 2 16 Current Replacement Cost December 31, Year 1 $14 December 31, Year 2 18

a. Prepare an analysis for Year 1 that identifies operating margins, realized holding gains and losses, and unrealized holding gains and losses for the FIFO. LIFO. and weighted-average cost flow assumptions.

b. Repeat part a for Year 2.

c. Demonstrate that over the two-year period, income plus holding gains before taxes ol Hartison Corporation are independent of the cost flow assumption.
41. Detailed comparison of various choices for inventory accounting. Burton Corporation commenced retailing operations on January 1. Year 1. Purchases of merchandise inventory during Year 1 and Year 2 appear below: X Quantity Purchased Unit Price Acquisition Cost 1/10/Year 1 600 6/30/Year 1 200 10/20/Year 1 400 Total Year 1 1,200 $10 12 15 $ 6,000 2,400 6,000 Quantity Purchased Unit Price Acquisition Cost 2/18/Year 2 500 7/15/Year 2 500 12/15/Year 2 800 Total Year 2 1,800 $14 $ 7,000 12 6,000 10 8,000 $21,000 Burton Corporation sold 1.000 units during Year 1 and 1,500 units during Year 2.

a. Calculate the cost of goods sold for Year 1 using a FIFO cost flow assumption.

b. Calculate the cost of goods sold for Year 1 using a LIFO cost flow assumption.

c. Calculate the cost of goods sold for Year 1 using a weighted-average cost flow assumption.

d. Calculate the cost of goods sold for Year 2 using a FIFO cost flow assumption.

e. Calculate the cost of goods sold for Year 2 using a LIFO cost flow assumption.

f. Calculate the cost of goods sold for Year 2 using a weighted-average cost flow assumption.
g. Will FIFO or LIFO result in reporting the larger net income for Year 1? Explain.
h. Will FIFO or LIFO result in reporting the larger net income for Year 2? Explain.