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

1.) Largest net income on the income statement?

2.) Largest asset value (inventory value) on the balance sheet?

3.) Maximizes cash flow (minimizes taxes paid)

4.) Inflation or deflation

5.) Matches actual physical flow of units

6.) Closest to current costs on the income statement

7.) Closest to current costs on the balance sheet

8.) Method chosen