P6-2 Evaluating Three Alternative Inventory Methods Based on Net Earnings and Cash Flow LO6-2, 6-3 At January 31 of the current year, the records of Regina Company showed the following for a particular item that sold at $18 per unit: Required: 1. Assuming the use of a perpetual inventory system, prepare a summarized statement through gross profit on sales under each of the following inventory costing methods: (a) weighted-average cost, (b) FIFO, and (c) specific identification, assuming that the company is permitted to use this method. For specific identification, assume that the first sale was out of the beginning inventory and the second sale was out of the January 12 purchase. Show the inventory computations in detail. 2. Which method would result in: a. The highest pretax earnings? b. The lowest income tax expense? c. The most favourable cash flow? 3. Prepare journal entries to record the transactions that occurred in January of the current year. Assume that all sales and purchase transactions are on account and that FIFO is used for inventory costing