Comparing Inventory Methods Assume that a firm separately determined inventory under FIFO and LIFO and then compared the results. a. In each dropdown that follows, select the correct sign [less than ( ), or equal (=)] for each comparison, assuming periods of rising prices. 1. FIFO inventory LIFO inventory 2. FIFO cost of goods sold LIFO cost of goods sold 3. FIFO net income LIFO net income 4. FIFO income taxes LIFO income taxes b. Why would management prefer to use LIFO over FIFO in periods of rising prices? 1. Income shown on the company's tax return would be lower if LIFO rather than FIFO is used. 2. Income shown on the company's tax return would be higher if LIFO rather than FIFO is used. 3. Cost of goods sold shown on the company's income statement would be lower if LIFO rather than FIFO is used. 4. Dividends shown on the company's financial statements would be higher if LIFO rather than FIFO is used. Periodic inventory by three methods; cost of goods sold The units of an item available for sale during the year were as follows: Jan. 1 Inventory 50 units at $106 Mar. 10 Purchase 60 units at $114 Aug. 30 Purchase 20 units at $118 Dec. 12 Purchase 70 units at $120 There are 80 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the ending inventory cost and the cost of goods sold by three methods. Round interim calculations to one decimal and final answers to the nearest whole dollar. Cost of Ending Inventory and Cost of Goods Sold Inventory Method Ending Inventory Cost of Goods Sold First-in, first-out (FIFO) Last-in, first-out (LIFO) Weighted average cost