Daniel Company uses a periodic inventory system. Data for thecurrent year: beginning merchandise inventory (ending inventoryDecember 31, prior year), 2,070 units at $35; purchases, 7,920units at $37; expenses (excluding income taxes), $193,500; endinginventory per physical count at December 31, current year, 1,670units; sales, 8,320 units; sales price per unit, $77; and averageincome tax rate, 36 percent.
1. Compute cost of goods sold and prepareincome statements under the FIFO, LIFO, and average cost inventorycosting methods. (Round your final answers to nearest wholedollar. Do not round your intermediate calculations.)
2. Between FIFO and LIFO, which method ispreferable in terms of (a) net income and (b)income taxes paid (cash flow)?
3. Between FIFO and LIFO, which method ispreferable in terms of (a) net income and (b)income taxes paid (cash flow), assuming that prices werefalling?
