Martin Merchandising has hired you to examine whether the company should use the LIFO or FIFO inventory costing method. The company uses a perpetual inventory system and has supplied the following information for the month:

Required
Prepare multi-step income statements under the LIFO and FIFO costing methods. Explain to Martin the advantages and disadvantages of using each inventory costing method. Use the income statements to support your explanation.

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Beginning inventory, 2,000 units at $40 Purchases on June 4, 12,000 units at $45 Sales on June 18, 10,500 units at $77 Operating expenses (excluding taxes) Company tax rate $ 80,000 540,000 808,500 148,000 35%