Following is an inventory acquisition schedule for Fees Corp. for 2010:

Required
1. Compute cost of goods sold and ending inventory under each of the following three methods assuming a periodic inventory system:
(a) Weighted average,
(b) FIFO, and
(c) LIFO.
2. Prepare income statements under each of the three methods.
3. Which method do you recommend so that Fees pays the least amount of taxes during 2010? Explain your answer.
4. Fees anticipates that unit costs for inventory will increase throughout 2011. Will Fees be able to switch from the method you recommended that it use in 2010 to another method to take advantage of the increase in prices for tax purposes? Explain youranswer.

Transcribed Image Text:

Units Unit Cost 4,000 $20 Beginning inventory Purchases February 4 April 12 September 10 December 5 2,000 3,000 1,000 2,500 18 16 14 12