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1. Prepare the journal entry to record the shrinkage loss assuming that Software City uses the FIFO flow assumption. 2. Prepare the journal entry to record the shrinkage loss assuming that Software City uses the LIFO flow assumption. 3. Which cost flow assumption (FIFO or LIFO) results in the lowest net income for the period? Would using this assumption really mean that the companys operations are less efficient? Explain. Pemberton Products uses a periodic inventory system. The companys records show the beginning inventory of PH4 oil filters on January 1 and the purchases of this item during the current year to be as follows 1. Prepare the journal entry to record the shrinkage loss assuming that Software City uses the FIFO flow assumption. 2. Prepare the journal entry to record the shrinkage loss assuming that Software City uses the LIFO flow assumption. 3. Which cost flow assumption (FIFO or LIFO) results in the lowest net income for the period? Would using this assumption really mean that the companys operations are less efficient? Explain.

Chapler 8 Irvertonies and the Cost of Goods Sold 1. Prepare the joarnal enary to record the shrinkagee loss assanaing that Software Cify lises the Flro flow asmimption. 2. Prepare the joornal entry to necond the shrinkase loss usvueneng that Soffwary City used the. LIIO flow assumption. 3. Whech cost flone atsumption (FIFO or L.IFO) reails in the loweg net incone for that penod? Would using this assumption really mean that the coitepany s pperations ato less efficient? Explain he av rollowes: the +146) Chapler 8 Irvertonies and the Cost of Goods Sold 1. Prepare the joarnal enary to record the shrinkagee loss assanaing that Software Cify lises the Flro flow asmimption. 2. Prepare the joornal entry to necond the shrinkase loss usvueneng that Soffwary City used the. LIIO flow assumption. 3. Whech cost flone atsumption (FIFO or L.IFO) reails in the loweg net incone for that penod? Would using this assumption really mean that the coitepany s pperations ato less efficient? Explain he av rollowes: the +146)