E7-9 Evaluating the Choice among Three Alternative Inventory Methods Based on Cash Flow Effects LO7-2, 7-3

Following is partial information for the income statement of Audio Solutions Company under three different inventory costing methods, assuming the use of a periodic inventory system:

Required:

1. Compute cost of goods sold under the FIFO, LIFO, and average cost inventory costing methods. (Do not round intermediate calculations.)

COGS

Beg inventory (400 units @ $28)

Purchases (475 units @35)

Goods available

ending inventory (525)

COGS

2. Prepare an income statement through pretax income for each method.

Sales, 350 units; unit sales price, $50; Expenses, $1,700

NEED HELP PREPARING INCOME STATEMENT

3. Rank the three methods in order of income taxes paid (favorable cash flow).