Hurley Inc. is a wholesaler of motorcycle parts. The company uses a perpetual inventory system, and its fiscal year ends on December 31. Hurley had the following transactions during 2012

Transactions	Units	Unit Cost
Inventory Dec 31, 2011	10,000	$8.0
For 2012
Purchase, March 21	30,000	$6.0
Sale, June 20 ($13 each)	35,000
Purchase, Aug 9	15,000	$5.5
Sale, Nov 20 ($10 each)	12,000

Required:

1. Compute the gross profit, assuming the company uses FIFO.

2. Would your answer above be different under a periodic inventory system, assuming the company continues to use the FIFO inventory costing method? Explain your answers. Calculations are not necessary to answer this requirement.

3. In the most recent annual report, Hurley stated that its inventories are carried at the lower of cost and net realizable value (LCNRV). What effects would this rule have on the companys financial statements (B/S, I/S, Cash Flow Statement) if the net realizable value of Hurleys ending inventory drops below cost?