1a) Given the following data, fill in the tableFOR JANUARYusing the three cost flow assumptions given. That is, indicate the COST of ending inventory that will appear on the Balance Sheet and the COST of goods sold expense that will appear on the Income Statement.

Date	Units	Cost per unit	Total cost
1/1 - beginning inventory	40	$10	$400
1/10 - purchase of inventory	20	$20	$400
1/15 - purchase of inventory	20	$22	$440
Available for sale	80		$1,240
Ending inventory	20

Number of units sold is 60 in January (80 - 20 ending inventory)

	FIFO	LIFO	Average Cost
Cost of Ending Inventory
Cost of Goods Sold

1b) If the sales price is $50 per unit, calculate the Gross ProfitFOR JANUARYas well under each of the three cost flow assumptions.

	FIFO	LIFO	Average Cost
Sales Revenue (60 units * $50)	$3,000	$3,000	$3,000
Cost of Goods Sold
Gross Profit

1c) Which method results in the highest inventory balance on the Balance Sheet?

1d) Which method results in the highest cost of goods sold expense on the Income Statement?

1e) Which method results in the highest Gross Profit?

1f) Which method will result in the highest tax expense?

1g) Calculate inventory turnover (cost of goods sold expense/average inventory) under each of the three methods.

1h) What conclusions can you draw regarding these methods?