Ground-Navy Surplus Ltd. began May 2017 with 72 tents that cost $20 each. During the month, Ground-Navy Surplus made the following purchases at cost: (Click the icon to view the purchases.) Ground-Navy Surplus sold 321 tents (151 tents on May 22 and 170 tents on May 30), and at May 31 the ending inventory consists of 55 tents. The sale price of each tent was $50. Requirements Requirement 1. Determine the cost of goods sold and ending inventory amounts for May under (a) weighted average cost and (b) FIFO cost. Round weighted average cost per unit to four decimal places, and round all other amounts to the nearest dollar. (Assume a perpetual inventory control system is used.) Weighted- Average Cost FIFO Ending inventory Cost of goods sold Requirement 2. Explain why cost of goods sold is highest under weighted average cost. Be specific. (Assume a perpetual inventory control system is used.) Weighted average cost results in the highest cost of goods sold because (a) the cost of tents is rising and (b) weighted average cost includes the cost of the latest inventory purchases . When costs are rising, these latest inventory costs are the highest and that makes cost of goods sold the highest under weighted average cost. Requirement 3. Prepare Ground-Navy Surplus's income statement for May 2017. Report gross profit. Operating expenses totalled $3,250. Ground-Navy Surplus uses the weighted average costing for inventory. The income tax rate is 32%. (Round income tax expense to the nearest whole dollar.) Ground-Navy Surplus Ltd. Income Statement For the Month Ended May 31, 2017 0 Purchases Sales revenue Cost of goods sold Gross profit May $ Operating expenses 99 tents @ $ 22 164 tents @ 24 41 tents @ 25 = = = 2,178 3,936 1,025 Income before income taxes Income tax expense Print Done Net income