Jet Black Products uses a periodic inventory system. For 2010 and 2011, Jet Black has the following data:

All purchases and sales are for cash.

Required:
1. Compute cost of goods sold, the cost of ending inventory, and gross margin for each year using FIFO.
2. Compute cost of goods sold, the cost of ending inventory, and gross margin for each year using LIFO.
3. Compute cost of goods sold, the cost of ending inventory, and gross margin for each year using the average cost method. (Note: Use four decimal places for per unit calculations and round all other numbers to the nearest dollar).
4.  Which method would result in the lowest amount paid for taxes?
5.  Which method produces the most realistic amount for income? For inventory? Explain your answer.
6. What is the effect of purchases made later in the year on the gross margin when LIFO is employed? When FIFO is employed? Be sure to explain why any differences occur.
7.  What are the differences? Be sure to explain why any differences occurred.

Purchase Price Sale Price (per unit) Activity Units per unit 2010 Beginning inventory Purchase 1, Feb. 15 Sale Mar. 10 Purchase 2, Sept. 15 Sale 2, Nov. 3 Purchase 3, Dec. 20 2011 Sale 3, Apr. 4 Purchase 4, June 25 Sale 4, Dec. 18 200 300 320 500 550 150 9.00 11.00 12.00 13.00 $25.00 25.00 200 200 150 25.00 14.00 25.00