CON7-1 (Algo) Evaluating the Choice of Inventory Method When Costs Are Rising and Falling Pool Corporation, Inc., reported in its recent annual report that "In 2010, our industry experienced some price deflation.... In 2011, our industry experienced more normalized price inflation of approximately 3.3% overall despite price deflation for certain chemical products." This suggests that in some years Pool's overall inventory costs rise, and in some years they fall. Furthermore, in many years, the costs of some inventory items rise while others fall. Assume that Pool has only two product items in its inventory this year. Purchase and sales data are presented below. Transaction Inventory Item A Units Inventory Item B Unit Cost Units Unit Cost Beginning inventory 170 $ 7.30 170 $7.30 Purchases, February 7 210 9.30 210 6.30 Purchases, March 16 Sales, April 28 230 430 10.30 230 4.30 430 Required: 1. Compute cost of goods sold for each of the two items separately using the FIFO and LIFO inventory costing methods. 2. Between FIFO and LIFO, which method is preferable in terms of (a) net income and (b) income taxes paid (cash flow)? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute cost of goods sold for each of the two items separately using the FIFO and LIFO inventory costing methods. Item A Item B FIFO LIFO