You work for a CPA firm that has been hired by Widget Tek Inc., a merchandising company that is getting ready to expand. The president of Widget Tek Inc. is concerned with obtaining a loan for the expansion and wants to be sure that all the financial statements accurately reflect the companys accounting records.

As preparation for this assignment, you have been asked to review the effects of changing prices on three inventory costing methods: LIFO, FIFO, and weighted average.

Identify the scenarios and inventory methods that result in the highest and lowest values for each item listed. Enter Highest, Lowest, or leave the box blank.

	Cost of MerchandiseSold	Ending Merchandise Inventory	Net Income
LIFO, when prices are falling	____	_____	____
FIFO, when prices are rising	___	___	___
Weighted average, when prices are rising	____	____	____
Weighted average, when prices are falling	_____	___	___
LIFO, when prices are rising	____	____	____
FIFO, when prices are falling	____	____	____

Study the inventory record for March and answer the questions that follow.

1.	Assuming that the product sells for $160 and that 80% of sales are on account, determine the gross profit from sales for March. ______
2.	Making the same assumptions as in (1), determine the ending inventory cost for March. _____
3.	Which inventory method is being used? LIFO