Emily Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 2: Inventory, December 31, prior year For the current year: Purchase, April 11 Purchase, June 1 Units 2,810 Unit Cost $ 10 8,900 11 7,850 16 Sales ($56 each) 10,840 Operating expenses (excluding income tax expense) $ 185,000 Required: 1. Prepare a separate income statement through pretax income that details cost of goods sold for (a) Case A: FIFO and (b) Case B: LIFO. 2. Compute the difference between the pretax income and the ending inventory amount for the two cases. 3. Which inventory costing method may be preferred for income tax purposes? Sales revenue EMILY COMPANY Income Statement For the Year Ended December 31, current year Case A FIFO $ 607,040 Cost of goods sold: Beginning inventory $ 28,100 Purchases 223,500 Goods available for sale 251,600 Ending inventory Cost of goods sold Gross profit Operating expenses Pretax income Case B LIFO $ 607,040 $ 28,100 223,500 251,600 185,000 185,000 Pretax income Ending inventory Case A FIFO Comparison of Amounts Case B LIFO Difference