The records of Glenn Aviation include the following accounts for inventory of aviation parts atJuly31 of the current year:

Inventory
Aug	1	Balance	800	units	@	$7.00		$5,600
Nov	5	Purchase	500	units	@	$7.10		3,550
Jan	24	Purchase	8,100	units	@	$7.50		60,750
Apr	8	Purchase	600	units	@	$8.50		5,100

Sales Revenue
									Jul 31 9,050 units $129,415

Requirement 1. Prepare a partial income statement through gross profit under the average, FIFO, and LIFO methods. Round average cost per unit to two decimal places and all other amounts to the nearest dollar.

		Glenn Aviation
		Partial Income Statement
		Year Ended July 31

		Gross profit

Average cost

FIFO

LIFO

Requirement 2. Which inventory method would you use to minimize income tax? Explain why this method causes income tax to be the lowest.

Use the

average-cost

FIFO

LIFO

method to minimize income tax because cost of goods sold is highest (gross profit is lowest) under

average-cost

FIFO

LIFO

when inventory costs are

falling

rising

static

.