Clear Sound Audio uses a periodic inventory system. One of the stores most popular products is an MP8 car stereo system. The inventory quantities, purchases, and sales of this product for the most recent years are as follows:

	Number of Units	Cost Per Unit	Total Cost
Inventory, Jan 1	12	$299	$ 3,588
First Purchase (May 12)	15	306	4,590
Second purchase (July 9)	21	308	6,468
Third purchase (Oct 4)	8	315	2,520
Fourth purchase (Dec 18)	17	320	5,440
Goods available for sale	73		$ 22,606
Units sold during the year	51
Inventory, Dec 31	22

Instructions:

a. using periodic costing procedures, computer cost of the December 31 inventory in the cost of goods sold for the MP8 systems during the year under each of the following cost flow assumption:

1. First-in, first-out

2. Last-in, first-out

3. Average cost (round to nearest dollar, except unit cost)

b. Which of the three inventory pricing methods provide the most realistic balance sheet valuation of inventory in light of the current replacement cost of the MP8 units? Does this same method also produce the most realistic measure of income in light of the cost being incurred by Clear Sound Audio to replace the MP8 systems when they are sold? Explain.