Beck Inc. uses a periodic inventory system. At the end of theannual accounting period, December 31 of the current year, theaccounting records provided the following information for product2:
| | | Units | Unit Cost |
| Inventory, December 31, prior year | | | | 7,000 | | | $ | 11 | |
| For the current year: | | | | | | | | | |
| Purchase, March 5 | | | | 19,000 | | | | 9 | |
| Purchase, September 19 | | | | 10,000 | | | | 5 | |
| Sale ($28 each) | | | | 8,000 | | | | | |
| Sale ($30 each) | | | | 16,000 | | | | | |
| Operating expenses (excluding income tax expense) | $ | 400,000 | | | | | | | |
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1. Prepare a separate income statement throughpretax income that details cost of goods sold for (a) CaseA: FIFO and (b) Case B: LIFO. (Loss amounts shouldbe indicated with a minus sign.)
2. Compute the difference between the pretaxincome and the ending inventory amounts for the two cases.
