1. Jensen Company started business on February 1st and applies the periodic inventory system. It had the following inventory transactions:

Purchases:

Date Received Quantity Unit Cost

2/5 80 $6.00

2/11 120 $8.00

2/18 140 $10.00

Units sold: 240

Compute the dollar amount of ending inventory using the average cost method. Round the unit cost to two decimal places.

2. In a period of rising prices, the application of which inventory method (FIFO, LIFO, or average cost) would result in the lowest amount of net income? Please explain.