Steve Company buys and sells one product. Its beginning inventory, purchases, and sales during calendar-year 2018 follow.

DateUnits Acquired at Cost Sold at Retail

Jan.1 Beg. inventory 400 units @ $14=$5,600

Jan.15Sale 200 units @ $30

Mar. 10 Purchase 200 units @ $15=$3,000

Apr.1Sale200 units @ $30

May9 Purchase 300 units @ $16=$4,800

Sep. 22 Purchase 250 units @ $20=$5,000

Nov.1 Sale 300 units @ $35

Nov. 28 Purchase 100 units @ $21=$2,100

Totals Units Available for Sale 1,250 units = $20,500Total Units Sold 700 units

Additional tracking data for specific identification: (1) January 15 sale200 units @ $14, (2) April 1 sale200 units @ $15, and (3) November 1 sale200 units @ $14 and 100 units @ $20.

1)Compute gross profit earned by the company for each of the four costing methods in part 2. Also, report the inventory amount reported on the balance sheet for each of the four methods.

Specific Identification

-Gross Profit

-Ending Inventory

FIFO

LIFO

Average Costs

2)In preparing financial statements for year 2018, the financial officer was instructed to use FIFO but failed to do so and instead computed cost of goods sold according to LIFO, which led to a $1,400 overstatement in cost of goods sold from using LIFO. Determine the impact on year 2018's income from the error. Also determine the effect of this error on year 2019's income. Assume no income taxes.

3)Management wants a report that shows how changing from FIFO to another method would change net income. A table showing (1) the cost of goods sold amount under each of the four methods, (2) the amount by which each cost of goods sold total is different from the FIFO cost of goods sold, and (3) the effect on net income if another method is used instead of FIFO. Page 231