P 8-6 Periodic Inventory System:

Jan 1 Beginning inventory 1,000 @ $12 per unit

Feb 4 Purchase 2,000 @ $18 per unit

Apr 2 Purchase 3,000 @ $23 per unit

At the end of December, they counted 1,300 units in inventory.

Required: Using FIFO, LIFO, and Average Costing:

1. Compute the cost of goods sold for the income statement for the year.
2. Compute the cost of the ending inventory for the Dec. 31 balance sheet
3. Answer the attached questions based on what you computed for COGS and EI

Largest net income on the income statement

Largest asset value (inventory value) on the balance sheet

Maximizes cash flow (minimizes taxes paid)

Inflation or deflation

Matches actual physical flow of units

Closest to current costs on the income statement

Closest to current costs on the balance sheet

Method chosen