E7-11 (Static) Choosing LIFO versus FIFO When Costs Are Rising and Falling [LO 7-3] Use the following information to complete this exercise: sales, 550 units for $12,500; beginning inventory, 300 units; purchases, 400 units; ending inventory, 150 units; and operating expenses, $4,000. Required: 1. Complete the table for each situation. In Situations A and B (costs rising), assume the following: beginning Inventory, 300 units at $12 $3,600; purchases, 400 units at $13-$5,200. In Situations C and D (costs falling), assume the opposite; that is, beginning inventory, 300 units at $13-$3,900; purchases, 400 units at $12 $4,800. Use periodic inventory procedures. Costs Rising Costs Falling Situation A FIFO Situation B LIFO Situation C FIFO Situation Di LIFO Sales Revenue $ 12,500 $ 12,500 $ 12,500 $ 12,500 Beginning Inventory $ 3,600 Purchases 5,200 Goods Available for Sale 8,800 0 0 0 Ending Inventory 1,950 Cost of Goods Sold 6,850 0 0 Gross Profit 5,650 Operating Expenses 4,000 4,000 4,000 4,000 Income from Operations 1,650 Income Tax Expense (30%) 495 Net Income $ 1,155