Pool Corporation, Inc., reported in its recent annual report that "In 2010, our industry experienced some price deflation. ... In 2011, our industry experienced more normalized price inflation of approximately 2.4% overall despite price deflation for certain chemical products." This suggests that in some years Pool's overall inventory costs rise, and in some years they fall. Furthermore, in many years, the costs of some inventory items rise while others fall. Assume that Pool has only two product items in its inventory this year. Purchase and sales data are presented below. Transaction Beginning inventory Purchases, February 7 Purchases, March 16 Sales: April 28 Inventory Item A Units Unit Cost 80 $6.40 120 8. 40 140 9.40 240 Inventory Item B Units Unit Cost 80 S6.40 120 5.40 140 3. 40 240 Required: 1. Compute cost of goods sold for each of the two items separately using the FIFO and LIFO inventory costing methods. 2. Between FIFO and LIFO, which method is preferable in terms of (a) net income and (b) income taxes paid (cash flow)? Required 1 Required 2 Compute cost of goods sold for each of the two items separately using the FIFO and LIFO inventory costing methods. FIFO LIFO Item A Item B Required 1 Required 2 Between FIFO and LIFO, which method is preferable in terms of (a) net income and (b) income taxes paid (cash flow)? Item A Item B (a) Net income (6) Income taxes paid