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. Units sold at Retail Units Acquired at Cost 225 units@ $15.00 = $ 3,375 Date Activities Jan. 1 Beginning inventory Jan. 10 Sales Jan. 20 Purchase Jan. 25 Sales Jan. 30 Purchase Totals 2,520 180 units @ $14.00 = 350 units @ $13.50 = 755 units 175 units @ $24.00 210 units @ $24.00 4,725 $10,620 385 units The Company uses a perpetual inventory system. For specific identification, ending inventory consists of 370 units, where 350 are from the January 30 purchase, 5 are from the January 20 purchase, and 15 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 $2,100 and that the applicable income tax rate is 40%. (Round your Intermediate calculations to 2 decimal places.) LAKER COMPANY Income Statements For Month Ended January 31 Specific Weighted Identification Average FIFO L IFO Sales Cost of goods sold Gross profit Expenses Income before taxes Income tax expense Net income

Answer 1

Correct Answer:

Laker company
Income Statements
For the months ended January 31
	Specific identifications	weighted average	FIFO	LIFO
Sales	$           9,240.00	$                     9,240.00	$              9,240.00	$      9,240.00
Cost of goods sold	$ 5600	$                     5,609.10	$              5,615.00	$            5,565
Gross profit	$           3,640.00	$                     3,630.90	$              3,625.00	$            3,675
Expenses	$ 2100	$ 2100	$ 2100	$ 2100
Income Before taxes	$           1,540.00	$                     1,530.90	$              1,525.00	$      1,575.00
Income tax expense	$               616.00	$                         612.36	$                  610.00	$          630.00
Net income	$               924.00	$                         918.54	$                  915.00	$          945.00

Working:

Cost of Goods Available for sale
	Units	Cost per unit	value
Beginning Inventory	225	$                       15.0	$                     3,375.0
Purchases	180	$                       14.0	$                     2,520.0
Purchases	350	$                       13.5	$                     4,725.0
Total	755		$                   10,620.0

Specific Identifications
Date	Goods Available for sale			Cost of Goods Sold			Ending Inventory Balance
	# of Units	Cost Per Unit	Cost of Goods Available for sale	# of Units Sold	Cost per Unit	Cost of Goods Sold	# of Units	Cost per Unit	Inventory Balance
Beginning Inventory	225	$          15.00	$         3,375.00	210	$    15.00	$      3,150.00	15	$        15.00	$          225.00
Purchases
20-Jan	180	14	$         2,520.00	175	$    14.00	$      2,450.00	5	$        14.00	$             70.00
30-Jan	350	$          13.50	$         4,725.00	0	$    13.50	$                   -	350	$        13.50	$       4,725.00
Totals	755		$       10,620.00	385		$      5,600.00	370		$       5,020.00

	FIFO
A	Total Units Available for sale			755		$               10,620
	Units Sold			370
	Ending Inventory Units			385
	Valuation
	Cost of Goods Sold		225		$                         15.00	$            3,375.00
B	Cost of Goods Sold		385	units		$                  5,615
A-B	Ending Inventory		370	units		$              5,005.0

	LIFO
A	Total Units Available for sale			755		$               10,620
	Units Sold			385
	Ending Inventory Units			370
	Valuation
	Cost of Goods Sold		175		$                         15.00	2,625.00
			210		$                         14.00	2,940.00
B	Cost of Goods Sold		385	units		$            5,565.00
A-B	Ending Inventory		370	units		$            5,055.00

Moving average cost
	Inventory balance	Total cost	Average cost for each units
01-Jan	225	$          3,375.00	$        15.0
10-Jan	50	$              750.00	$        15.0
20-Jan	230	$          3,270.00	$        14.21
25-Jan	20	$              284.35	$        14.21
30-Jan	370	$          5,009.35	$        13.53

	Weighted Average
A	Total Units Available for sale			755		$         10,620.00
	Units Sold			385
	Ending Inventory Units			370
	Valuation
	Cost of Goods Sold		175		$                    15.00	$            2,625.00
			210		$                    14.21	$            2,984.10
B	Cost of Goods Sold		385	units		$                  5,609
A-B	Ending Inventory		370	units		$                  5,011

End of answer.

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