The management of Tamarisk, Inc. asks your help in determining the comparative effects of the FIFO and LIFO inventory cost flow methods. For 2019, the accounting records provide the following data.

Inventory, January 1 (12,000 units)		$54,000
Cost of 120,000 units purchased		638,400
Selling price of 96,000 units sold		840,000
Operating expenses		132,000

Units purchased consisted of 42,000 units at $5.10 on May 10; 42,000 units at $5.30 on August 15; and 36,000 units at $5.60 on November 20. Income taxes are 30%.

Prepare comparative condensed income statements for 2019 under FIFO and LIFO.

Tamarisk, Inc. Condensed Income Statement December 31, 2019For the Year Ended December 31, 2019For the Month Ended December 31, 2019
	FIFO		LIFO
Beginning InventoryCost of Goods Available for SaleCost of Goods PurchasedCost of Goods SoldDividendsEnding InventoryGross Profit / (Loss)Income before Income TaxesIncome Tax ExpenseNet Income / (Loss)Operating ExpensesRetained Earnings, January 1Retained Earnings, December 31Sales RevenueTotal Sales Revenue	$		$
Beginning InventoryCost of Goods Available for SaleCost of Goods PurchasedCost of Goods SoldDividendsEnding InventoryGross Profit / (Loss)Income before Income TaxesIncome Tax ExpenseNet Income / (Loss)Operating ExpensesRetained Earnings, January 1Retained Earnings, December 31Sales RevenueTotal Sales Revenue
Beginning Inventory Cost of Goods Available for Sale Cost of Goods Purchased Cost of Goods Sold Dividends Ending Inventory Gross Profit / (Loss) Income before Income Taxes Income Tax Expense Net Income / (Loss) Operating Expenses Retained Earnings, January 1 Retained Earnings, December 31 Sales Revenue Total Sales Revenue
Beginning Inventory Cost of Goods Available for Sale Cost of Goods Purchased Cost of Goods Sold Dividends Ending Inventory Gross Profit / (Loss) Income before Income Taxes Income Tax Expense Net Income / (Loss) Operating Expenses Retained Earnings, January 1 Retained Earnings, December 31 Sales Revenue Total Sales Revenue
Beginning Inventory Cost of Goods Available for Sale Cost of Goods Purchased Cost of Goods Sold Dividends Ending Inventory Gross Profit / (Loss) Income before Income Taxes Income Tax Expense Net Income / (Loss) Operating Expenses Retained Earnings, January 1 Retained Earnings, December 31 Sales Revenue Total Sales Revenue
Beginning Inventory Cost of Goods Available for Sale Cost of Goods Purchased Cost of Goods Sold Dividends Ending Inventory Gross Profit / (Loss) Income before Income Taxes Income Tax Expense Net Income / (Loss) Operating Expenses Retained Earnings, January 1 Retained Earnings, December 31 Sales Revenue Total Sales Revenue
Beginning Inventory Cost of Goods Available for Sale Cost of Goods Purchased Cost of Goods Sold Dividends Ending Inventory Gross Profit / (Loss) Income before Income Taxes Income Tax Expense Net Income / (Loss) Operating Expenses Retained Earnings, January 1 Retained Earnings, December 31 Sales Revenue Total Sales Revenue
Beginning InventoryCost of Goods Available for SaleCost of Goods PurchasedCost of Goods SoldDividendsEnding InventoryGross Profit / (Loss)Income before Income TaxesIncome Tax ExpenseNet Income / (Loss)Operating ExpensesRetained Earnings, January 1Retained Earnings, December 31Sales RevenueTotal Sales Revenue
Beginning InventoryCost of Goods Available for SaleCost of Goods PurchasedCost of Goods SoldDividendsEnding InventoryGross Profit / (Loss)Income before Income TaxesIncome Tax ExpenseNet Income / (Loss)Operating ExpensesRetained Earnings, January 1Retained Earnings, December 31Sales RevenueTotal Sales Revenue
Beginning InventoryCost of Goods Available for SaleCost of Goods PurchasedCost of Goods SoldDividendsEnding InventoryGross Profit / (Loss)Income before Income TaxesIncome Tax ExpenseNet Income / (Loss)Operating ExpensesRetained Earnings, January 1Retained Earnings, December 31Sales RevenueTotal Sales Revenue
Beginning InventoryCost of Goods Available for SaleCost of Goods PurchasedCost of Goods SoldDividendsEnding InventoryGross Profit / (Loss)Income before Income TaxesIncome Tax ExpenseNet Income / (Loss)Operating ExpensesRetained Earnings, January 1Retained Earnings, December 31Sales RevenueTotal Sales Revenue
Beginning InventoryCost of Goods Available for SaleCost of Goods PurchasedCost of Goods SoldDividendsEnding InventoryGross Profit / (Loss)Income before Income TaxesIncome Tax ExpenseNet Income / (Loss)Operating ExpensesRetained Earnings, January 1Retained Earnings, December 31Sales RevenueTotal Sales Revenue	$		$

Answer the following questions for management.

(1)		Which inventory cost flow method produces the most meaningful inventory amount for the balance sheet?		Averag-cost methodLIFO methodFIFO method
(2)		Which inventory cost flow method produces the most meaningful net income?		FIFO methodLIFO methodAverag-cost method
(3)		Which inventory cost flow method is most likely to approximate actual physical flow of the goods?		FIFO methodLIFO methodAverag-cost method
(4)		How much additional cash will be available for management under LIFO than under FIFO?		$
(5)		How much of the gross profit under FIFO is illusory in comparison with the gross profit under LIFO?