E6-28B. (Learning Objective 2: Compare ending inventory and cost of goods sold-FIFO vs. LIFO) MusicMagic.net specializes in sound equipment. Because each inventory item is expen- sive, Music Magic uses a perpetual inventory system. Company records indicate the following data for a line of speakers: Date Item Quantity Unit Cost Sale Price Sep 1 Balance........ 17 $62 Sep 3 Purchase.... 3 71 5 $114 7 114 Sep 8 Sale......... Sep 12 Sale..... Requirements 1. Determine the amounts that Music Magic should report for cost of goods sold and ending inventory two ways: a. FIFO b. LIFO 2. Music Magic uses the FIFO method. Prepare MusicMagic's income statement for the month ended September 30, 2014, reporting gross profit. Operating expenses totaled $320, and the income tax rate was 35%.