Problem 5. The Jones Company uses a periodic inventory system and has an accounting period of one month. The following information relates to the year ended 12/31/2012.

Beginning Inventory 1100 units @ $16 per unit

Purchase 650 units @ $22 per unit

Sale 675 units @ $60 per unit

Purchase 250 units @ $27 per unit

Sale 720 units @ $65 per unit

1. Calculate ending inventory under LIFO.

2. What would gross profit be under FIFO?

3. Indicate which inventory method (LIFO or FIFO) is the income statement. In other words, indicate which method provides the most useful income statement information? EXPLAIN WHY.

4. If inventory costs were decreasing instead of increasing for Jones, would your answer to question 3 change? EXPLAIN.

5. Which inventory method (LIFO or FIFO) should Jones Co. choose in order to maximize the companys short term cash position (i.e., economic wealth)? EXPLAIN