1. Prepare an Income statement of the company at the end of February using as method of valuation of the inventory the average cost method, FIFO and LIFO for each one of the products sold by Jim, and calculate the balance of the inventory at the end of the month. Explain the calculations.

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BUSINESS CASE (100 points) Jim has recently opened a snack food wholesale company dedicated to the sale of peanuts, almonds and pistachios. During its first month of activity, the company has made the following transactions: February 2: Purchase of Pistachios: Purchase of Almonds: Purchase of Peanuts: kg 2300 4000 4000 Price per kg $12 $6 $4 Amount $27,600 $24,000 $16,000 February 3: Purchase of Pistachios: Purchase of Almonds: Purchas of Peanuts: 1500 1500 2500 $14 $7 $5 $21,000 $10,500 $12,500 1900 February 6: Sold to several clients: Pistachios: Almonds: Peanuts: 2500 2500 $21 $12 $10 $39,900 $30,000 $25,000 February 6: Sold to Fruits Lovers Inc.: Pistachios: Almonds: Peanuts: 500 750 1500 $21 $13 $9 $10,500 $9,750 $13,500 February 12 Purchase of Pistachios: Purchase of almonds: 1350 3000 $15 $8 $20,250 $24,000 February 13: Sale of peanuts to Peanuts Lovers Inc.: 3250 $9 $29,250 February 14: Purchase of Peanuts 2000 $5 $10,000 Besides these transactions, the company has had the following expenses: Salaries: $3,750 Electricity bill: $400 Renting of equipment: $1,500 Rent of warehouse and office: $3,250 Miscellaneous: $1,250 Jim's accountant recommended that he should use the average cost method in order to determine the cost of the inventory sold but he is not sure about the consequences it may have on his financial situation. Relying on your accounting knowledge, Jim asks you the following questions