e7-7 (algo) analyzing and interpreting the financial statement effects of lifo and fifo lo7-2, 7-3 emily company uses a periodic inventory system. at the end of the annual accounting period, december 31 of the current year, the accounting records provided the following information for product 2: units unit cost inventory, december 31, prior year 2,980 $ 12 for the current year: purchase, april 11 8,980 13 purchase, june 1 7,840 18 sales ($52 each) 10,850 operating expenses (excluding income tax expense) $ 185,500 required: prepare a separate income statement through pretax income that details cost of goods sold for (a) case a: fifo and (b) case b: lifo. compute the difference between the pretax income and the ending inventory amount for the two cases. which inventory costing method may be preferred for income tax purposes?
