QUESTION 1 (20 points) a. Why in your opinion did Julia's accountant recommend the average cost method? b.Name and explain the main characteristics of the 3 methods of valuation of the inventory c.

QUESTION 1 (20 points) 

a. Why in your opinion did Julia's accountant recommend the average cost method?

b.Name and explain the main characteristics of the 3 methods of valuation of the inventory 

c. Explain the consequences each valuation method may have on the valuation of the inventory in the above scenario and the determination of the net income in case of price fluctuation 

QUESTION 2 

 Prepare an Income statement of the company at the end of February for each one of the products sold by Julia using the following methods of valuation of the inventory: You can ignore all tax consequences. 

a. The average cost method 

b.FIFO method and

 c. LIFO method Calculate the balances of the inventory at the end of the month for each valuation method and provide explanations of the calculations.