Solar Heating, Inc., had the following transactions for 2011:

Required

a. Determine the quantity and dollar amount of inventory at the end of the year, assuming Solar Heating Inc. uses the FIFO cost flow assumption and keeps perpetual records.

b. Write a memo explaining why Solar Heating, Inc., would have difficulty applying the LIFO method on a perpetual basis. Include a discussion of how to overcome these difficulties.

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Date Jan. 1 Transaction Description Beginning inventory 50 units @ $20 Mar. 15 Purchased 200 units @ $24 May 30 Sold 170 units @ $40 Aug. 10 Purchased 275 units @$25 Nov. 20 Sold 340 units @ $40