Effect of LIFO on financial statements over several periods. Howell Corporation commenced operations on January 2. Year 7. Its purchases and sales for the first four years of operations appear below:

X Year 7 .

Year 8 .

Year 9 .

Year 10 Purchases Sales Units Unit Cost Units Unit Price 36,000 $10.00 28,000 $12.00 40,000 10.50 38,000 12.60 45,000 11.30 48,000 13.23 53,000 12.40 52,000 13.89 Howell Corporation uses a LIFO cost flow assumption. Ignore income taxes.

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

b. Compute income for each of the four years.

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

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