Givoly Inc. 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:

			Units			Unit Cost
Inventory, December 31, prior year				7,900			$	11
For the current year:
Purchase, March 5				19,900				9
Purchase, September 19				10,900				5
Sale ($27 each)				8,900
Sale ($29 each)				16,900
Operating expenses (excluding income tax expense)	$	409,000

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 amounts for the two cases.

Comparison Amounts

Case A Case B

FIFO LIFO Difference

Pretax Income

Ending Inventory

3. Which inventory costing method may be preferred for income tax purposes?