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$ per unit:

Transactions Units Amount

Inventory, January $1500$ $$2,365$

Purchase, January $126003,600$

Purchase, January $261601,280$

Sale $(370)$

Sale $(250)$

Required:

$1$a$.$ 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.

$1$b$.$ 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.

$2$a$.$ Between FIFO and LIFO, which method would result in the higher pretax income?

$2$b$.$ Between FIFO and LIFO, which would result in the higher EPS?

$3.$ Between FIFO and LIFO, which method would result in the lower income tax expense? Assume a $20$ percent average tax rate.

$4.$ Between FIFO and LIFO, which method would produce the more favorable cash flow?