! Required information P7-3 (Algo) Evaluating Four Alternative Inventory Methods Based on Income and Cash Flow L07-2, 7-3 [The following information applies to the questions displayed below.] At the end of January of the current year, the records of Donner Company showed the following for a particular item that sold at $17.40 per unit: Units Transactions Inventory, January 1 Purchase, January 12 Purchase, January 26 Sale Sale 620 600 150 (480) (200) Amount $3,255 4,200 1,350 P7-3 Part 4 4. Between FIFO or LIFO, which method would produce the more favorable cash flow? Method FIFO, because of it produces lower Income tax expense FIFO, because of it produces higher Income tax expense LIFO, because of it produces lower Income tax expense LIFO, because of it produces higher Income tax expense No difference in cash flow