1. (Periodic Inventory Systems and LIFO/FIFO) Respond to each of the following prompts:
   1. How is a periodic inventory system different from a perpetual inventory system? When is the inventory account updated for purchases and sales that occur during a period under each of these systems?
   2. A company that uses a periodic system can determine the quantity of inventory at a period-end using a physical count. Describe the process of backing into the quantity of inventory sold during the period. (Hint: refer to and discuss what I call the inventory equation.)
   3. ABC Company uses a periodic inventory system and experienced the following transactions related to its merchandise inventory in April.

Quantity Unit Cost

April 1 Inventory on hand 1,200 $4.00

April 3 Purchase 300 $5.00

April 8 Sale 1,000

April 11 Purchase 500 $6.00

April 19 Sale 500

April 25 Purchase 450 $7.00

April 30 Sale 600

Determine the inventory balance ABC would report on its April 30 Balance sheet and the cost of goods sold it would report on its April income statement using the FIFO and LIFO cost flow assumptions. Show your work.