5. LIFO vs. FIFO The Bates Company shows the following data related to an item of inventory: Inventory, January 1 200 units @ $5.5 Purchase, January 9 400 units @ $5.8 Purchase, January 19 110 units @ $6.5 Inventory, January 31 Instructions: 300 units (a) What value should be assigned to cost of goods sold using FIFO under the periodic inventory system? (b) What value should be assigned to the ending inventory using LIFO and FIFO, respectively? (c) How much is the LIFO reserve? How much is the unrealized holding gain of inventory for the firm that uses LIFO cost flow assumption in this question? (d) During periods when costs are rising and inventory quantities are stable, will cost of goods sold be higher or lower under FIFO than LIFO? Will the net income be higher or lower under FIFO than LIFO? (e) During periods when costs are rising and inventory quantities are stable, will ending inventory be higher or lower under LIFO than FIFO? Will the working capital be higher or lower under LIFO than FIFO? (note: working capital = current assets current liabilities) (f) Explain how your answer to part (a) will change if Bates used the perpetual inventory system.