E7-6: I only need required 1 & 4

nterpreting Cost of Sales and Inventory 7 Reporting and Interpreting 401 CHAPTER 7 A Pretax Earnings or (Loss) 1L072,73 Average Cost Methods rpreting the Financial Statement Effects of the FIFO and Weiglede Lunar Company uses a perpetual invento 9 uses a perpetual inventory system. The company's accounting records provide following information for Product 2: Transactions Units Unit Cost a. Inventory, December 31, 2016 3,000 $12 For the year 2017: b. Purchase, April 11 9,000 c. Sale, May 1 ($30 each) 5,000 d. Purchase, June 1 e. Sale, July 3 ($30 each) 6,000 f. Operating expenses (excluding income tax expense). $85.000 100 (100) 10 8.000 13 -ach of Required: 1. Prepare a statement of earnings for 2017, through pretax earnings, showing the detailed computation of cost of sales for two cases: a. Case A-FIFO b. Case BWeighted average For each case, show the computation of the ending inventory. (Hint: Set up adjacent columns, one for each case.) 2. Compare the pretax earnings and the ending inventory amounts between the two cases. Explain the similarities and differences. 3. Which inventory costing method may be preferred for income tax purposes? Explain. 4. Prepare journal entries to record transactions (6) through (e), as well as the cost of sales at December 31, 2017, assuming that Lunar uses FIFO for inventory costing. 1L07-2,7-3 E7-7 Analyzing and Interpreting the Financial Statement Effects of FIFO and Weighted Average Cost Methods L'autoru sustem. At December 31, 2018, the company's accounting