Problem 6-4A The management of Sheridan Company is reevaluating the appropriateness of using its present inventory cost flow method, which is average-cost. The company requests your help in determining the results of operations for 2019 if either the FIFO or the LIFO method had been used. For 2019, the accounting records show these data: Inventories Purchases and Sales $22,400 Beginning (11,200 units) Ending (27,200 units) Total net sales (288,000 units) Total cost of goods purchased (304,000 units) $1,195,200 730,400 Purchases were made quarterly as follows. Quarter Units Unit Cost Total Cost NM + 80,000 64,000 64,000 96,000 $2.15 2.30 2.45 2.65 $172,000 147,200 156,800 254,400 304,000 $730,400 Operating expenses were $130,000, and the company's income tax rate is 40%. Prepare comparative condensed income statements for 2019 under FIFO and LIFO. Sheridan Company Condensed Income Statements FIFO LIFO Answer the following questions for management. (1) Which cost flow method (FIFO or LIFO) produces the more meaningful inventory amount for the balance sheet? (2) Which cost flow method (FIFO or LIFO) produces the more meaningful net income? (3) Which cost flow method (FIFO or LIFO) is more likely to approximate the actual physical flow of goods? (4) How much more cash will be available for management under LIFO than under FIFO? $ (5) Will gross profit under the average-cost method be higher or lower than FIFO? Will gross profit under the average-cost method be higher or lower than LIFO