The management of National Inc. asks your help in determining the comparative effects of the FIFO and LIFO inventory cost flow methods. For 2017, the accounting records show these data.

Inventory, January 1 (10,000 units)	$35,000
Cost of 120,000 units purchased	468,500
Selling price of 98,000 units sold	750,000
Operating expenses	124,000

Units purchased consisted of 35,000 units at $3.70 on May 10, 60,000 units at $3.90 on August 15, and 25,000 units at $4.20 on November 20. Income taxes are 28%.

Instructions

(a)

Prepare comparative condensed income statements for 2017 under FIFO and LIFO. (Show computations of ending inventory.)

Gross profit:

FIFO	$378,800
LIFO	$362,900