The records of Armstrong Aviation Supply Inc. include the following accounts for inven-

tory of aviation fuel at December 31, 2011:

Inventory

Jan. 1 Balance 700 units @ $7.00 4,900

Mar. 6 Purchase 300 units @ 7.05 2,115

June 22 Purchase 8,400 units @ 7.50 63,000

Oct. 4 Purchase 500 units @ 8.50 4,250

Sales Revenue

Dec. 31 9,000 units 127,800

Required

1. Prepare a partial income statement through gross profit under the weighted-average-cost

and FIFO methods. Round weighted-average cost per unit to four decimal places and all

other amounts to the nearest dollar.

2. Which inventory method would you use to minimize income tax? Explain why this

method causes income tax to be the lowest.