You are provided with the following information for Gas Guzzlers. Gas Guzzlers uses the periodic method of accounting for its inventory transactions.

March 1 Beginning inventory 1.500 litres at a cost of 40c per litre.

March 3 Purchased 2.000 litres at a cost of 45

March 5 Sold 1.800 litres for 60c per litre.

March 10 Purchased 3.500 litres at a cost of 49c per litre.

March 20 Purchased 2.000 litres at a cost of 55c per litre.

March 30 Sold 5.000 litres for 70c per litre.

Instructions

(a) Prepare partial income statements through gross profit, and calculate the value of ending inventon,' that would be reported on the balance sheet, under each of the following cost flow assumptions.

(1) Specific identification method assuming:

(i) the March 5 sale consisted of 900 litres from the March 1 beginning inventory and 900 litres from the March 3 purchase: and

(ii) the March 30 sale consisted of the following number of units sold from each purchase:

400 litres from March 1: 500 litres from March 3; 2.600 litres from March 10:

1.500 litres from March 20.

(2) FIFO.

(3) LIFO.

(b) How can companies use a cost flow method to justify price increases.' Which cost flow method would best support an argument to increase prices?