Question

Required information (The following information applies to the questions displayed below.) Laker Company reported the following January purchases and sales data for its only product. IN Units Acquired at Cost 185 units@ $11.00 – $2,035 Units sold at Retail 145 units @ $20.00 Date Activities Jan. 1 Beginning inventory Jan. 10 Sales Jan. 20 Purchase Jan. 25 Sales Jan. 30 Purchase Totals 100 units $10.00 - 1,000 125 units @ $20.00 270 unitse $ 9.50 - 555 units 2,565 $5,600 270 units The Company uses a perpetual inventory system. For specific identification, ending inventory consists of 285 units, where 270 are from the January 30 purchase, 5 are from the January 20 purchase, and 10 are from beginning inventory Required: 1. Complete comparative income statements for the month of January for Laker Company for the four inventory methods. Assume expenses are $1700, and that the applicable income tax rate is 40%, (Round your Intermediate calculations to 2 decimal places.)

Answer 1

1.

LAKER COMPANY
Income Statements
For month ended january 31
	Specific Identification	Weighted Avg	FIFO	LIFO
Sales	5,400.00	5,400.00	5,400.00	5,400.00
Cost of Goods Sold	2,875.00	2,880.71	2,885.00	2,870.00
Gross Profit	2,525.00	2,519.29	2,515.00	2,530.00
Expenses	1,700.00	1,700.00	1,700.00	1,700.00
Income before taxes	825.00	819.29	815.00	830.00
income tax Expense	330.00	327.71	326.00	332.00
Net income	495.00	491.57	489.00	498.00

2. LIFO

3.yes

4.FIFO

Working note

Specific identification

	Available for Sale			Cost of Goods Sold			Ending inventory
Date	Activity	Units	Unit cost	Units Sold	Unit cost	COGS	End inv units	Unit cost	End Inv Cost
Jan-01	Beginning	185.00	11.00	175.00	11.00	1,925.00	10.00	11.00	110.00
Jan-20	Purchase	100.00	10.00	95.00	10.00	950.00	5.00	10.00	50.00
Jan-30	Purchase	270.00	9.50	-	9.50	-	270.00	9.50	2,565.00
		555.00				2,875.00	285.00		2,725.00

Weighted Average

	Available for Sale			Cost of Goods Sold			Ending inventory
Date	Units	Cost	Total	Units Sold	Unit cost	COGS	End inv units	Unit cost	End Inv Cost
Jan-01							185.00	11.00	2,035.00
Jan-10				145.00	11.00	1,595.00	40.00	11.00	440.00
Jan-20	100.00	10.00	1,000.00				40.00	11.00	440.00
							100.00	10.00	1,000.00
Average Cost							140.00	10.29	1,440.00
Jan-25				125.00	10.29	1,285.71	15.00	10.29	154.29
Jan-30	270.00	9.50	2,565.00				15.00	10.29	154.29
							270.00	9.50	2,565.00
Totals						2,880.71	285.00		2,719.29

FIFO

	Available for Sale			Cost of Goods Sold			Ending inventory
Date	Units	Cost	Total	Units Sold	Unit cost	COGS	End inv units	Unit cost	End Inv Cost
Jan-01							185.00	11.00	2,035.00
Jan-10				145.00	11.00	1,595.00	40.00	11.00	440.00
Jan-20	100.00	10.00	1,000.00				40.00	11.00	440.00
							100.00	10.00	1,000.00
Jan-25				40.00	11.00	440.00	15.00	10.00	150.00
				85.00	10.00	850.00
Jan-30	270.00	9.50	2,565.00				15.00	10.00	150.00
							270.00	9.50	2,565.00
Total						2,885.00	285.00		2,715.00

LIFO

	Available for Sale			Cost of Goods Sold			Ending inventory
Date	Units	Cost	Total	Units Sold	Unit cost	COGS	End inv units	Unit cost	End Inv Cost
Jan-01							185.00	11.00	2,035.00
Jan-10				145.00	11.00	1,595.00	40.00	11.00	440.00
Jan-20	100.00	10.00	1,000.00				40.00	11.00	440.00
							100.00	10.00	1,000.00
Jan-25				100.00	10.00	1,000.00	15.00	11.00	165.00
				25.00	11.00	275.00
Jan-30	270.00	9.50	2,565.00				15.00	11.00	165.00
							270.00	9.50	2,565.00
Total						2,870.00	285.00		2,730.00