Required information P7-3 (Algo) Evaluating Four Alternative Inventory Methods Based on Income and Cash Flow LO7-2, 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 $16.20 per unit: Transactions Units Inventory, January 1 570 Amount $1,995 Purchase, January 12 550 3,025 Purchase, January 26 150 1,125 Sale Sale (430) (200) P7-3 Part 1 Required: 1a. Assuming the use of a periodic inventory system, compute Cost of Goods Sold under each method of inventory: average cost, FIFO, LIFO, and specific identification. For specific identification, assume that the first sale was selected from the beginning inventory and the second sale was selected from the January 12 purchase. 1b. Assuming the use of a periodic inventory system, prepare a partial income statement under each method of inventory: (a) average cost, (b) FIFO, (c) LIFO, and (d) specific identification. For specific identification, assume that the first sale was selected from the beginning inventory and the second sale was selected from the January 12 purchase. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Assuming the use of a periodic inventory system, compute Cost of Goods Sold under each method of inventory: average cost, FIFO, LIFO, and specific identification. For specific identification, assume that the first sale was selected from the beginning inventory and the second sale was selected from the January 12 purchase. (Round unit price to 2 decimal places. Input all amounts as positive values.) Average Cost Beginning inventory Cost of Good Available for Sale Cost of Goods Sold Cost of Cost of # of Units Cost per Unit Goods Available # of Units Sold Cost per Goods Unit Sold for Sale 570 $ 1,995 Purchases: January 12 550 $ 3,025 January 26 150 $ 1,125 Total 1,270 $ 4.84 $ 6,145 630 $ 4.84 $ 3,049 FIFO Cost of Goods Available for Sale Cost of Goods Sold Cost of Cost of # of Units Cost per Unit Goods Available # of Units Cost per Sold Unit Goods Sold for Sale Beginning inventory 570 $ 3.50 $ 1,995 570 $ 3.50 $ 1,995 Purchases: January 12 550 5.50 $3,025 $ EA January 26 150 7.50 $ 1,125 0 Total 1,270 $ 6,145 570 0 $ 1,995 LIFO Cost of Goods Available for Sale Cost of Goods Sold Cost of Cost of # of Units Cost per Unit Goods Available # of Units Cost per Sold Unit Goods Sold for Sale Beginning inventory 570 $ 3.50 $ 1,995 Purchases: $ January 12 550 5.50 3,025.00 January 26 150 7.50 1,125.00 Total 1,270 $ 6,145 0 Specific Identification Cost of Goods Available for Sale Cost of Goods Sold Cost of Cost of # of Units Cost per Unit Goods # of Units Cost per Goods Available Sold Unit Sold for Sale Beginning inventory Purchases: 570 $ 3.50 $ 1,995 January 12 550 5.50 $ 3,025 January 26 150 7.50 $ 1,125 Total 1,270 $ 6,145 0 $ 0 Req 1A Req 1B Assuming the use of a periodic inventory system, prepare a partial income statement under each method of inventory: (a) average cost, (b) FIFO, (c) LIFO, and (d) specific identification. For specific identification, assume that the first sale was selected from the beginning inventory and the second sale was selected from the January 12 purchase. DONNER COMPANY Partial Income Statement For the Month Ended January 31, Current Year (a) (b) (c) (d) Average Cost Specific FIFO LIFO Identification P7-3 Part 3 3. Between FIFO or LIFO, which method would result in the lower income tax expense? Assume a 30 percent average tax rate. (Round your answer to 2 decimal places.) Method LIFO Tax Savings