Question

Laker Company reported the following January purchases and sales data for its only product Date Activities Units Sold at Retail Units Acquired at Cost 180 units 56.40 = $ 1,152 Jan. 1 Beginning 120 units @ $15.80 inventory Jan. 10 Sales Jan.20 Purchase Jan. 25 Sales 100 units 20 = 540 100 units @ $15.80 Jan. 30 Purchase 220 unitsga.90 1,078 Totals 500 units $2,770 220 units The Company uses a periodic inventory system. For specific identification, ending inventory consists of 280 units, where 220 are from the January 30 purchase, 25 are from the January 20 purchase, and 35 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 $1,650, and that the applicable income tax rate is 20%. (Round your average cost per unit to 2 decimal places.)

Answer 1

Units Acquired at Cost rate amount 180 units 6.4 solution: Date Jan. Jan. Jan. Jan. Jan. 1896 Activities 1 Beginning inventory 10 Sales 20 Purchase 25 Sales 30 Purchase Totals 100 units 5.4 amount Units Sold at Retail rate 1,152 120 units 15.80 540 100 units 15.80 1,078 2,770 220 units 1580 4.9 220 units 500 units 3,476 5.54 Weighted average cost = 2770/500 FIFO LIFO Sales Cost of goods sold* Gross profit Expenses Income before taxes Income tax expense at 40% Net income LAKER COMPANY Income Statements For Month Ended January 31 Specific Weighted Identification Average 3,476 3,476 1,333 1,219 2,143 2,257 1,650 1,650 607 99 121 394 486 3,476 1,368 2,108 1,650 458 3,476 1,078 2,398 1,650 748 493 92 150 366 598 Specific Weighted Identification Average FIFO L IFO 1,333 1,219 1,368 1,078 (100-25)*5.4+(180-35)*6.4 | 220*5.54 | 180*6.4+40*5.4 | 220*4.9 Cost of goods sold* calculation