The records of Eaton Aviation include the following accounts for inventory of aviation parts at July 31 of the current year:

Requirements

1. Prepare a partial income statement through gross profit under the average-cost, FIFO, and LIFO methods. Round average cost per unit to two decimal places and all other amounts to the nearest whole dollar.

2. Which inventory method would you use to minimize income tax? Explain why this method causes income tax to be the lowest.

Transcribed Image Text:

Inventory 800 units @ $7.00 $ 5,600 3,550 60,750 Balance Aug 1 Purchase 500 units @ $7.10 Nov 5 Purchase 8,100 units @ $7.50 Purchase 600 units @ $8.50 Jan 24 Apr 8 5,100 Sales Revenue Jul 31 9,030 units $130,935