At the start of the current period, Alberich Jewelers had an inventory of three identical gold rings. The cost of the gold ring purchased first is $640, the gold ring purchased next had a cost of $720, and the most recent purchase had a cost of $750. During the current period one of the gold rings was sold for $1,400. Alberich expects this gold ring will be a fast seller and he is thinking about ordering more of the same model for $780 each.

If Alberich elects the FIFO method of inventory, after selling one ring for $1,400, compute the gross profit he should report.

2. Alternatively, assume Alberich elects the LIFO method. After selling one ring for $1,400 and before purchasing any additional rings, Alberich prepares a balance sheet. Compute the amount, if any, he should report as merchandise inventory.

3. Alberich draws a salary from the business and his plan is to take as much salary as he can without contracting the business. He always wants to maintain his inventory of three identical rings. On the basis of the information provided, what is the maximum amount that Alberich can pay himself in salary for the current period if he insists that he will carry exactly three rings in inventory and he sells all three of the original rings for $1,400 each for total sales of $4,200?