Hello! Please explain step by step how to make an income statement for the following problem. I can't figure out how to apply LIFO/FIFO to a problem like this... How do we calculate the information for 2008, when only 2007 is provided? Or was 2007 calculated somehow?

Again, as step-by-step as possible would be so good for me to learn how this is done. Thanks

\fAssume for simplicity that Merrimack uses perpetual inventory system and each quarter there is only one sale transaction at the end of the quarter. 1. Prepare a proforma income statement assuming no changes in accounting policy for 2008. Assuming that the company sells 10,000 units each quarter at a price of $2,000 per unit with Sales General and Administration costs the same as for 2007. The income tax rate is 35%. 2. Prepare a proforma income statement of 2008. assuming the unit sales pattern was 10,000, 5.000, 20.000, 5,000 units in the four quarters. 3. Assuming 10,000 units of sales per quarter, what are the effects of using FIFO on the financial statements? Prepare a pro- forma income statement of 2008. (Hint: The 2008 beginning inventory book value should be in accordance with FIFO) How would Merrimack Mowers and its accounting choices have differed if inventory purchase prices had been falling over the two- year period? (For example, if Merrimack were a computer assembly firm.)