Q. Keenly observe the figure given and give you opinion on the information by answering the questions below.

a. Which financial statement do you think is prepared by Trekking Company? What is Specific Identification, FIFO, LIFO, or Weighted Average? Explain.

b. Explain in your own words the process of these methods with a numerical example for each.

c. Assume that you are the manager of the company mentioned in the figure above which cost method would you prefer, support your answer.

$ TREKKING COMPANY For Month Ended August 31 Specific Identification FIFO Sales $ 6,050 $ 6,050 Cost of goods sold 4,582 4,570 Gross profit $ 1,468 $ 1,480 Operating expenses 450 450 Income before taxes 1,018 $ 1,030 Income tax expense (30%) 305 309 Net income $ 713 $ 721 $ LIFO 6,050 4,730 1,320 450 870 261 609 Weighted Average $ 6,050 4,622 1,428 450 $ 978 293 $ 685 $ $ Balance sheet inventory $ 1,408 $ 1,420 $ 1,260 $ 1,368