Analyzing and Interpreting the Financial Statement Effects of LIFO and FIFO Givoly Inc. uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 2: Units Unit Cost 7,000 $ 11 19,000 Inventory, December 31, prior year For the current year: Purchase, March 5 Purchase, September 19 Sale ($28 each) Sale ($30 each) Operating expenses (excluding income tax expense) 10,000 8,000 16,000 $ 400,000 Required: = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = 1. Prepare a separate income statement through pretax income that details cost of goods sold for (a) Case A: FIFO and (b) Case B: LIFO. For each case, show the computation of the ending inventory and cost of goods sold. (Hint: Set up adjacent columns for each case.) 2. Compare the pretax income and the ending inventory amounts between the two cases. Explain the similarities and differences. __3. Which inventory costing method may be preferred for income tax purposes? Explain