The following information relates to the inventory of Harry’s Hardware during the month of December: Units Unit cost Total costDec. 1 Beginning Inventory 500 $5.00 $2 500 10 Purchases 500 5.30 2 650 23 Purchases 600 5.60 3 360 1 600 $8 150Harry’s Hardware uses the periodic inventory system. During the month, 700 units were sold for $6300. A physical stocktake on 31 December verified that 590 units were on hand. Ignore GST.REQUIRED:A. Prepare an income statement up to gross profit for December using each of the following costing methods:Specific identification, assuming that 300 units were sold from the beginning inventory and 400 units were sold from the first purchaseFIFOLIFOWeighted averageB. Which cost flow method resulted in the highest gross profit on sales? The highest ending inventory? Explain why your results differ
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