Instructions Accounts, Labels and Amount Descriptions X Following is an inventory acquisition schedule for Fees Corp. for 2016: Accounts Units Unit Cost Cost of goods sold Beginning inventory 4,000 $20 Income tax expense Purchases: February 4 2,000 18 Operating expenses Sales April 12 3,000 16 Labels September 10 1,000 14 December 5 2,500 12 December 31, 2016 For the Year Ended December 31, 2016 Amount Descriptions Gross profit During the year, Fees sold 11,000 units at $30 each. All expenses except cost of goods sold and taxes amounted to $60,000. The tax rate is 30%. Income before taxes Net income Required: 1. Compute cost of goods sold and ending inventory under each of the following three methods assuming a periodic inventory system: (a) weighted average, (b) FIFO, and (c) LIFO. 2. Prepare income statements under each of the three methods. 3. Which method do you recommend so that Fees pays the least amount of taxes during 2016? 4. Foes anticipates that unit costs for inventory will increase throughout 2017. Will Fees be able to switch from the method you recommended that it use in 2016 to another method to take advantage of the increase in prices for tax purposes? First Question 1. Compute cost of goods sold and ending inventory under each of the following three methods assuming a periodic inventory system: (a) weighted average, (b) FIFO, and (c) LIFO. Additional Instructions Ending Inventory Cost of Goods Sold $ Weighted average FIFO LIFO Income Statements Final Questions 2. Prepare income statements under each of the three methods. 3. Which method do you recommend so that Fees pays the least amount of taxes during 2016? Income Statement Instructions 4. Fees anticipates that unit costs for inventory will increase throughout 2017. Will Fees be able to switch from the method you recommended that it use in 2016 to another method to take advantage of the increase in prices for tax purposes? Fees Corp. Income Statements (Label) Weighted Average FIFO LIFO 2 3 4 5 6 7 8