The owner of Fardan Stereo Sales showed the following adjusted trial balance at December 31. 2014:

The owner, Mikel Fardan, is analyzing the effect of the various merchandise inventory costing methods on his financial statements and has prepared the following schedule:

Required:
1. Calculate the merchandise inventory values at December 31, 2014, under each inventory costing method shown in the schedule above.
2. Prepare a single-step income statement (showing one line each for net sales, cost of goods sold, operating expenses, and interest expense) for the year ended December 31, 2014, along with a balance sheet at December 31, 2014, assuming:
a. FIFO
b. Moving weighted average.
Analysis Component:
3. Does the schedule above reflect rising costs for merchandise inventory or falling costs? Explain how you know.
4. Based on your results in Part 2, which method should the owner use if he wants to:
a. Maximize net income?
b. Maximize assets?

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Account Account Balance" Cash 16,000 27,000 Merchandise inventory Prepaid rent .. 36,000 117,000 Accumulated depreciation, store fixtures...82,000 Trademark Accounts payable... Unearned sales revenue.... Notes payable, due in 20122,000 Mikel Fardan, capital 61,000 Mikel Fardan, withdrawals....44,000 Sales... . 3,000 . 18,000 4,000 449,000 6,000 Cost of goods sold Delivery expens.. Rent expense Salaries expense Interest expense Depreciation expense Assume normal account balances 5,000 109,000 2,000 8,000 Moving Weighted Average 12,000 159,000 59,000 FIFO 12,000 Purchases. Merchandise inventory, December 31, 2014. . 159,000 Cost of goods sold2,000 148,000