Courtney Company uses a periodic inventory system. Data for 2012: beginning merchandise inventory (December 31, 2011), 1,000 units at $35; purchases, 4,000 units at $38; operating expenses (excluding income taxes), $91,500; ending inventory per physical count at December 31, 2012, 900 units; sales price per unit, $75; and average income tax rate, 30%.
Required:
1. Prepare income statements under the FIFO, LIFO, and weighted average costing methods. Use a format similar to the following:

2. Between FIFO and LIFO, which method is preferable in terms of (a) maximizing income from operations or (b) minimizing income taxes? Explain.
3. What would be your answer to requirement 2 if costs were falling? Explain.

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Inventory Costing Method Weighted Average Income Statement Sales Revenue Cost of Goods Sold* Gross Profit Units FIFO LIFO perating Expenses Income from Operations Income Tax Expense Net Income Cost of goods sold equation Beginning Inventory Purchases Goods Available for Sale Ending Inventory Cost of Goods Sold