Required information (The following information applies to the questions displayed below.) Emily Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 2: Units Unit Cost $11 2,820 Inventory, December 31, prior year For the current year: Purchase, April 11 Purchase, June 1 Sales ($55 each) Operating expenses (excluding income tax expense) 8,850 7,820 10,890 12 17 $187,000 2. Compute the difference between the pretax income and the ending inventory amount for the two cases. Comparison of Amounts Case A Case B FIFO LIFO Difference Pretax income Ending inventory Required: 1. Prepare a separate income statement through pretax income that details cost of goods sold for (a) Case A: FIFO and (b) Case B: LIFO. EMILY COMPANY Income Statement For the Year Ended December 31, current year Case A Case B FIFO LIFO $ 598,950 $ 598,950 Sales revenue Cost of goods sold: Beginning inventory Purchases $ $ 31,020 31,020 239,140 239,140 Goods available for sale Ending inventory 270,160 142,300 270,160 100,380 Cost of goods sold Gross profit Operating expenses Pretax income 3. Which inventory costing method may be preferred for income tax purposes? Which inventory costing method may be preferred for income tax purposes