Use the data in Exercise to prepare comparative income statements for the month of January for Liberty Company similar to those shown in Exhibit for the four inventory methods. Assume expenses are $1,250, and that the applicable income tax rate is 30%.
In Exercise, Liberty Company reported the following January purchases and sales data for its only product.

1. Which method yields the highest net income?
2. Does net income using weighted average fall between that using FIFO and LIFO?
3. If costs were rising instead of falling, which method would yield the highest net income?

Date Activities Units Acquired at Cost 140 units @ $7.00 = $ 980 @ $6.00 1320 Units Sold at Retail Jan. I Beginning inventory . . . Jan. 10 Sales Jan. 20 Purchase Jan. 25 Sales Jan. 30 Purchase 90 units $15 220 units 145 units @ $15 Totals. 460 units $2,800 235 units