The records of Armstrong Aviation Supply Inc. include the following accounts for inventory of aviation fuel at December 31, 2011:
Inventory
- Jan. 1 Balance 700 units @ $7.00 4,900
- Mar. 6 Purchase 300 units @ 7.05 2,115
- June 22 Purchase 8,400 units @ 7.50 63,000
- Oct. 4 Purchase 500 units @ 8.50 4,250
Sales Revenue
Dec. 31 9,000 units 127,800
Required
1. Prepare a partial income statement through gross profit under the weighted-average-cost and FIFO methods. Round weighted-average cost per unit to four decimal places and all other amounts to the nearest dollar.
2. Which inventory method would you use to minimize income tax? Explain why this method causes income tax to be the lowest.