*Exercise 6-12 Alternative cost flow assumptionsperiodic

Paddington Gifts made purchases of a particular product in the current year as follows

240 units

lan 1 Beginning inventory................240 units @ $6.00 = $1440

Mar. 7 Purchased 500 units @ $5.60 = 2800

July 28 Purchased .. 1000 units @ $5.00 = 5000

Oct 3 Purchased .. 900 units @ $4.40 = 3960

Totals 2640 units $13200

Required: The business uses a periodic Inventory system, Ending inventory consists of 120 units. Calculate the costs to be assigned to the ending inventory and to goods sold under

a. FIFO

b, A weighted average cost basis

Which method provides the lower net income and why?