Heller Bottling Company began business in 2014. Inventory units purchased and sold for the first year of operations and each of the following four years follow:

Inadequate cash flows forced Heller Bottling Company to cease operations at the end of 2018.
a. Compute cost of goods sold for each of the five years if the company uses the following:
(1) LIFO cost fl ow assumption
(2) FIFO cost fl ow assumption
(3) Averaging cost fl ow assumption
b. Does the choice of a cost fl ow assumption affect total net income over the life of a business? Explain your answer.
c. If the choice of a cost fl ow assumption does not affect net income over the life of a business, how does the choice of LIFO give rise to a tax benefit?

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Units Purchased Cost per Unit Units Sold $12 5,000 2014 10,000 2015 12,000 16 16,000 18 2016 5,000 2,000 21 2017 10,000 10,000 2018 2,000 23 6,000