At the end of January of the current year, the records of Donner Company showed the following for a particular item that sold at $15.40 per unit:

Transactions	Units	Amount
Inventory, January 1	600	$1,800
Purchase, January 12	580	2,900
Purchase, January 26	180	1,260
Sale	(460)
Sale	(200)

Required:

1a. Assuming the use of a periodic inventory system, compute Cost of Goods Sold under each method of inventory: average cost, FIFO, LIFO, and specific identification. For specific identification, assume that the first sale was selected from the beginning inventory and the second sale was selected from the January 12 purchase.

1b. Assuming the use of a periodic inventory system, prepare a partial income statement under each method of inventory: (a) average cost, (b) FIFO, (c) LIFO, and (d) specific identification. For specific identification, assume that the first sale was selected from the beginning inventory and the second sale was selected from the January 12 purchase.

2a. Between FIFO and LIFO, which method would result in the higher pretax income?

2b. Between FIFO and LIFO, which would result in the higher EPS?

3. Between FIFO and LIFO, which method would result in the lower income tax expense? Assume a 20 percent average tax rate.

4. Between FIFO and LIFO, which method would produce the more favorable cash flow?

Assuming the use of a periodic inventory system, compute Cost of Goods Sold under each method of inventory: average cost, FIFO, LIFO, and specific identification. For specific identification, assume that the first sale was selected from the beginning inventory and the second sale was selected from the January 12 purchase. (Round unit price to 2 decimal places. Input all amounts as positive values.)

1A

Average Cost	Cost of Good Available for Sale	Cost of Goods Sold
	Number of Units	Cost per Unit	Cost of Goods Available for Sale	Number of Units Sold	Cost per Unit	Cost of Goods Sold
Beginning inventory
Purchases:
January 12
January 26
Total						$0
FIFO	Cost of Goods Available for Sale	Cost of Goods Sold
	Number of Units	Cost per Unit	Cost of Goods Available for Sale	Number of Units Sold	Cost per Unit	Cost of Goods Sold
Beginning inventory						$0
Purchases:
January 12						$0
January 26
Total	0			0
LIFO	Cost of Goods Available for Sale	Cost of Goods Sold
	Number of Units	Cost per Unit	Cost of Goods Available for Sale	Number of Units Sold	Cost per Unit	Cost of Goods Sold
Beginning inventory
Purchases:
January 12
January 26
Total				0
Specific Identification	Cost of Goods Available for Sale	Cost of Goods Sold
	Number of Units	Cost per Unit	Cost of Goods Available for Sale	Number of Units Sold	Cost per Unit	Cost of Goods Sold
Beginning inventory
Purchases:
January 12
January 26
Total			$0	0		$0

1B

DONNER COMPANY
Partial Income Statement
For the Month Ended January 31, Current Year
	(a)	(b)	(c)	(d)
	Average Cost	FIFO	LIFO	Specific Identification

2A:

Method:_______

2B:

Method:_______

3. Between FIFO and LIFO, which method would result in the lower income tax expense? Assume a 20 percent average tax rate. (Round your answer to 2 decimal places.)

		Tax Savings
Method

4.

Method:_______