Scoresby Inc. uses a perpetual inventory system. At December 31, 2018, the company's accounting records provided the following information for Product B: Units 7,000 Unit Cost $ 8 9 Transactions a. Inventory, December 31, 2017 For the year 2018: b. Purchase, March 5 c. Sale, June 15 ($29 each) d. Purchase, September 19 e. Sale, November 20 ($31 each) f. Operating expenses (excluding income tax expense), $500,000 19,000 10,000 8,000 16,000 - 11 Required: 1. Prepare a statement of earnings for 2018 through pretax earnings, showing the detailed computation of cost of sales for two cases: (Round intermediate calculations to 2 decimal places.) a. Case AFIFO b. Case BWeighted average. SCORESBY, INC. Statement of Earnings (Partial) For the Year Ended December 31, 2018 Case A Case B FIFO Weighted Average Beginning inventory $ 56,000 $ 56,000 Cost of sales: Purchases 171,000 171,000 Purchases 88,000 88,000 Goods available for sale 259,000 259,000 Ending inventory 259,000 259,000 FIFO Weighted Average $ 56,000 $ 56,000 Beginning inventory Cost of sales: Purchases Purchases 171,000 88,000 259,000 171,000 88,000 259,000 Goods available for sale Ending inventory 259,000 259,000 (203,000) (203,000) Sales revenue Pretax earnings (203,000) (203,000) 2. Compare the two cases with regard to the pretax earnings and the ending inventory amounts. Comparison of Amounts Case A Case B FIFO Weighted Average Pretax earnings Difference Ending Inventory Difference 3. Which inventory costing method may be preferred for income tax purposes? O Weighted average O FIFO 4. Prepare journal entries to record transactions (b) through (e), assuming that Scoresby uses FIFO for inventory costing. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list 1 Record the entry for purchase of inventory. 2 Record the entry for sales on account. 3 Record cost of sales on goods sold on account. 4 Record the entry for purchase of inventory. 5 Record the entry for sales on account. Credit 6 Record cost of sales on goods sold on account. 7 Record the entry for operating expenses. Note : = journal entry has been entered