Kane Ltd. had a beginning inventory on January 1 of 30 units of product SXL at a cost of $ 160 per unit. During the year, purchases were as follows:

Units	Unit Cost	Total Cost
Mar. 15	71	$ 149	$ 10,579
July 20	55	142	7,810
Sept. 4	54	130	7,020
Dec. 2	10	119	1,190

Kane uses a periodic inventory system. At the end of the year, a physical inventory count determined that there were 26 units on hand. Assume that Kane sold product SXL $ 200 per unit during the year.

Prepare a partial income statement through to gross profit for each of the two cost formulas: (1) FIFO and (2) average.(Round answers to the nearest whole dollar, e.g. 5,275.)

FIFO	Average
Sales	$	$
Cost of goods sold
Beginning inventory
Cost of goods purchased
Cost of goods available for sale
Ending inventory
Cost of goods sold
Gross profit

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Show how inventory would be reported in the current assets section of the statement of financial position for (1) FIFO and (2) average.(Round answers to the nearest whole dollar, e.g. 5,275.)

KANE LTD.Partial Statement of Financial Position
FIFO	Average
Assets
Current assets
	$	$

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Which cost formula results in the lower inventory amount for the statement of financial position? The lower gross profit amount for the income statement?

Average FIFO results in the lowest cost for ending inventory and FIFO Average results in the lower gross profit.

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