P6-4A The management of Gresa Inc. is reevaluating the appropriatenes of using its present inventory cost flow method, which i help in determining the results of operations for 2017 if either the FIFO or the LIFO method had been used. For 2017, the accounting records show these data: Beginning (7,000 units) Ending (17,000 units) Total net sales (18o,ooo units) Total cost of goods purchased (190,000 units) $14,000 $747,000 466,000 Purchases were made quarterly as follows. 50,000 40,000 40,000 $2.20 2.35 2.50 2.70 $110,000 94,000 100,000 190.000 Operating expenses were $130,000, and the company's income tax rate is 40%. Instructions (a) Prepare comparative condensed income statements for 2017 under FIFO and LIFO. (Show computations of ending invent (a) Gross profit $113,120 101,220 FIFO (b) Answer the following questions for m!anagement 1. Which cost flow method (FIFO or LIFO) produces the more meaningful inventory amount for the balance sheet? Why? 2. Which cost flow method (FIFO or LIFO) produces the more meaningful net income? Why? 3, which cost flow method (FIFO or LIFO) s nnore likely to approximate the actual physical flow of goods? Why? 4. How much more cash will be available for management under LIFO than under FIFO? Why? 5- Will gross profit under the average-cost method be higher or lower than FIFO? Than LIFO? (Note: It is not necessary to quantify your answer.) Calculate ending inventoru, cost of goods sold. aross profit, and aross profit rate uuder neriodic method: compare results