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At the end of January 2010, the records of Atlanta Company showed the following for the particular item that sold at $17 per unit

At the end of January 2010, the records of Atlanta Company showed the following for the particular item that sold at $17 per unit
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At the end of January 2010, the records of Atlanta Company showed the following for the particular item that sold at $17 per unit: Transactin Units Amount Inventory January 1 2010 500 $2,500 Purchase January 12 600 $3,600 Purchase January 26 160 1,280 Sale (370) Sale (250) Required: 1. assuming the use of a periodic inventory system, prepare a summarized income statement through gross profit on sales under each method of inventory (a) weighted average cost, (b) fifo (c) LIFO and (d) specific identification. For specific identification, assume that the first sale was out of the beginning inventory and the second sale was out of the January 12 purchase. Round the average cost per unit to the nearest cent. Show the inventory computations in detail. 2. Of Fifo and Lifo, which method would result in the highest pretax income ? Which would result in the highest EPS ? 3. Of Fifo and Lifo, which method would result in the lower income tax expense ? Explain, assuming a 30 per cent average tax rate. 4. Of Fifo and Lifo, which method would produce the more favourable cash flow ? explain NOTE: This question is NOT our property; we are only suggesting solution of this question.

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