In 20X8, Mehrabi Company had sales revenue of 444,000 for a line of woolen scarves. The company

In 20X8, Mehrabi Company had sales revenue of £444,000 for a line of woolen scarves. The company uses a periodic inventory system. Pertinent data for 20X8 included the following:

1. Prepare a statement of gross margin for 20X8. Use two columns, one assuming LIFO and one assuming FIFO.
2. Assume a 40% income tax rate. Suppose all transactions were for cash. Which inventory method would result in more cash for Mehrabi Company, and by howmuch?

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Inventory, December 31,207 14,000 units @ £6E 84,000 January purchases July purchases Sales for the year 22,000 units @ £7 = 154,000 30,000 units @ £8240,000 40,000 units