A company uses the FIFO method. Beginning inventory was 500 units at $10 each. Purchases were as follows:

• 1,000 units at $12 each
• 500 units at $14 each

Ending inventory is 700 units.

Requirements:

(a) Calculate the cost of ending inventory. (b) Determine the cost of goods sold. (c) Prepare the journal entries for purchases and cost of goods sold. (d) Discuss the impact of using FIFO on financial statements.