Lunar Company uses a perpetual inventory system. The companys accounting records provided the following information for Product 2:

Transactions		Units			Unit Cost
a.	Inventory, December 31, 2019		3,900		$	12
For the year 2020:
b.	Purchase, April 11		9,900			10
c.	Sale, May 1 ($30 each)		5,900
d.	Purchase, June 1		8,900			13
e.	Sale, July 3 ($30 each)		6,900
f.	Operating expenses (excluding income tax expense), $85,900

Required:

1. Prepare a statement of earnings for 2020, through pretax earnings, showing the detailed computation of cost of sales for two cases:

Case AFIFO

Case BWeighted average (Round intermediate calculations to 2 decimal places.)

2. Calculate the pretax earnings and the ending inventory amounts between the two cases. (pretax earnings, difference, ending inventory, difference)

3. Which inventory costing method may be preferred for income tax purposes?

multiple choice: FIFO or Weighted Average

4. Prepare journal entries to record transactions (b) through (e), assuming that all sales and purchase transactions are on account and that Scoresby uses FIFO for inventory costing. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)