Scoresby Inc. uses a perpetual inventory system. The companys accounting records provided the following information for product B at December 31, the end of the current fiscal year.

2. Compare the two cases with regard to the pretax earnings and the ending inventory amounts.

3. Which inventory costing method may be preferred for income tax purposes? [Weighted average OR FIFO]

4. Prepare journal entries to record transactions (b) through (e), assuming that all sales and purchase transactions are on account and 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.)

Required: 1. Prepare a statement of earnings for the current year through pretax earnings, showing the detailed computation of cost of sales for two cases: a. Case A-FIFO b. Case B-Weighted average (Round intermediate calculations to 2 decimal place.)