AutoParts Solutions uses the periodic inventory system and the FIFO method. The following transactions occurred during December 20X1:

• Beginning Inventory on December 1: 300 units at $55 per unit.
• December 10: Purchased 400 units at $60 per unit.
• December 20: Purchased 300 units at $65 per unit.
• Ending Inventory on December 31: 350 units.
• Sales for December: 600 units.

Required:

• Calculate the cost of goods sold (COGS) and ending inventory using the FIFO method.
• Prepare the journal entries to record the purchases and sales during December.
• Discuss the impact of using FIFO on the company’s gross profit and tax liability compared to LIFO.
• Explain how the periodic inventory system affects the timing of expense recognition in financial statements.