E7-9 (Algo) Evaluating the Choice among Three Alternative Inventory Methods Based on Cash Flow Effects LO7-2, 7-3

Following is partial information for the income statement of Audio Solutions Company under three different inventory costing methods, assuming the use of a periodic inventory system:

Required:

1. Compute cost of goods sold under the FIFO, LIFO, and average cost inventory costing methods.

2. Prepare an income statement through pretax income for each method.

Sales, 319 units; unit sales price, $50; Expenses, $1,510

3. Rank the three methods in order of income taxes paid (favorable cash flow).

Required 1 Required 2 Required 3 Compute cost of goods sold under the FIFO, LIFO, and average cost inventory costing methods. (Round intermediate calculations to 2 decimal places. Round your answers to the nearest whole dollar amount.) FIFO LIFO Average Cost $ 10,314 $ 10,314 $ 10,314 16,240 16,240 16,240 Cost of goods sold Beginning inventory (382 units @ $27) Purchases (464 units @ $35) Goods available for sale Ending inventory (527 units) Cost of goods sold Required 1 Required 2 Required 3 Prepare an income statement through pretax income for each method. Sales, 319 units; unit sales price, $50; Expenses, $1,510 FIFO LIFO Average Cost Required 1 Required 2 Required 3 Rank the three methods in order of income taxes paid (favorable cash flow). FIFO LIFO Average cost