Periodic inventory by three methods Required: 1. Determine the cost of the inventory on December 31 by the first-in, first-out method. PURCHASED MOST RECENTLY first. 3. Determine the cost of the inventory on December 31 by the weighted average cost method. 4a. Which inventory method would be preferred for income tax purposes in periods of rising prices? 4b. Which inventory method would be preferred for income tax purposes in periods of declining prices? Periodic inventory by three methods Required: 1. Determine the cost of the inventory on December 31 by the first-in, first-out method. PURCHASED MOST RECENTLY first. 3. Determine the cost of the inventory on December 31 by the weighted average cost method. 4a. Which inventory method would be preferred for income tax purposes in periods of rising prices? 4b. Which inventory method would be preferred for income tax purposes in periods of declining prices