Question

1. Laker Company reported the following January purchases and sales data for its only product.

-The Company uses a perpetual inventory system. For specific identification, ending inventory consists of 410 units, where 380 are from the January 30 purchase, 5 are from the January 20 purchase, and 25 are from beginning inventory.

- Complete comparative income statements for the month of January for Laker Company for the four inventory methods. Assume expenses are $2,250, and that the applicable income tax rate is 40%. (Round your Intermediate calculations to 2 decimal places.)

X sources - Google Chapter 05 Pre- B X C Laker Company Rep X C Complete Compara-X C1 ) Laker Company X C Perpetual: Income EX 0X Sign out @ newconnect.mheducation.com/flow/connect.html Chapter 05 Pre-Built Problems Help Save & Exit Submit Check my work Required information Use the following information for the Exercises below. {The following information applies to the questions displayed below.) points Laker Company reported the following January purchases and sales data for its only product. eBook Units Acquired at Cost 240 units $16.50 = $ 3, 960 Units sold at Retail 190 units @ $25.50 Hint Date Activities Jan. 1 Beginning inventory Jan. 10 Sales Jan. 20 Purchase Jan. 25 Sales Jan. 30 Purchase Totals 170 units@ $15.50 = 2,635 190 units @ $25.50 Ask 380 units@ $15.68 = 790 units 5,700 $12, 295 389 units Print References The Company uses a perpetual inventory system. For specific identification, ending inventory consists of 410 units, where 380 are from the January 30 purchase, 5 are from the January 20 purchase, and 25 are from beginning inventory. Exercise 5-4 Perpetual: Income effects of inventory methods LO A1 Required: 1. Complete comparative income statements for the month of January for Laker Company for the four inventory methods. Assume VnAnne a 750 and that the onlirakin inrama Hayratic Ano Don Salostamadiata cale latinne ta dorimallarne < Prev 2 of 9 !! Next > 9M 03:18

Answer 1

Solution 1:

Computation of ending inventory COGS under FIFO - Laker Company
Date	Beginning Inventory			Purchase			Cost of Goods Sold			Ending Inventory
	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
1-Jan	240	$16.50	$3,960.00	0	$0.00	$0.00	0	$0.00	$0.00	240	$16.50	$3,960.00
10-Jan	240	$16.50	$3,960.00	0	$0.00	$0.00	190	$16.50	$3,135.00	50	$16.50	$825.00
20-Jan	50	$16.50	$825.00	170	$15.50	$2,635.00	0	$0.00	$0.00	50	$16.50	$825.00
										170	$15.50	$2,635.00
25-Jan	50	$16.50	$825.00	0	$0.00	$0.00	50	$16.50	$825.00	30	$15.50	$465.00
	170	$15.50	$2,635.00				140	$15.50	$2,170.00
30-Jan	30	$15.50	$465.00	380	$15.00	$5,700.00	0	$0.00	$0.00	30	$15.50	$465.00
										380	$15.00	$5,700.00
Total							380		$6,130.00	410		$6,165.00

Computation of ending inventory COGS under LIFO - Laker Company
Date	Beginning Inventory			Purchase			Cost of Goods Sold			Ending Inventory
	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
1-Jan	240	$16.50	$3,960.00	0	$0.00	$0.00	0	$0.00	$0.00	240	$16.50	$3,960.00
10-Jan	240	$16.50	$3,960.00	0	$0.00	$0.00	190	$16.50	$3,135.00	50	$16.50	$825.00
20-Jan	50	$16.50	$825.00	170	$15.50	$2,635.00	0	$0.00	$0.00	50	$16.50	$825.00
										170	$15.50	$2,635.00
25-Jan	50	$16.50	$825.00	0	$0.00	$0.00	170	$15.50	$2,635.00	30	$16.50	$495.00
	170	$15.50	$2,635.00				20	$16.50	$330.00
30-Jan	30	$16.50	$495.00	380	$15.00	$5,700.00	0	$0.00	$0.00	30	$16.50	$495.00
										380	$15.00	$5,700.00
Total							380		$6,100.00	410		$6,195.00

Computation of ending inventory COGS under Weighted Average Cost - Laker Company
Date	Beginning Inventory			Purchase			Cost of Goods Sold			Ending Inventory
	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
1-Jan	240	$16.50	$3,960	0	$0.00	$0	0	$0.00	$0	240	$16.50	$3,960
10-Jan	240	$16.50	$3,960	0	$0.00	$0	190	$16.50	$3,135	50	$16.50	$825
20-Jan	50	$16.50	$825	170	$15.50	$2,635	0	$0.00	$0	220	$15.73	$3,460
25-Jan	220	$15.73	$3,460	0	$0.00	$0	190	$15.73	$2,988	30	$15.73	$472
25-Mar	30	$15.73	$472	380	$15.00	$5,700	0	$0.00	$0	410	$15.05	$6,172
Total							380		$6,123	410		$6,172

Computation of COGS and ending inventory - Specific identification
Particulars	Cost of goods available for sale			Cost of goods sold			Ending Inventory
	Nos of units	Unit Cost	Cost of goods available for sale	Nos of units sold	Unit Cost	Cost of goods sold	Nos of units in ending inventory	Unit Cost	Ending inventory
Beginning inventory	240	$16.50	$3,960	215	$16.50	$3,547.50	25	$16.50	$412.50
Purchases:
20-Jan	170	$15.50	$2,635	165	$15.50	$2,557.50	5	$15.50	$77.50
30-Jan	380	$15.00	$5,700	0	$15.00	$0.00	380	$15.00	$5,700.00
Total	790		$12,295	380		$6,105.00	410		$6,190.00

Income Statement - Laker Company
Particulars	Specific identification	Weighted Average	FIFO	LIFO
Sales	$9,690	$9,690	$9,690	$9,690
Cost of goods sold	$6,105	$6,123	$6,130	$6,100
Gross Profit (Sales - COGS)	$3,585	$3,567	$3,560	$3,590
Expenses	$2,250	$2,250	$2,250	$2,250
Income before taxes	$1,335	$1,317	$1,310	$1,340
Income tax expense (40%)	$534	$527	$524	$536
Net Income	$801	$790	$786	$804