Question

Laker Company reported the following January purchases and sales data for its only product. Units sold at Retail Units Acquired at Cost 145 units @ $ 7.00 = $ 1,015 105 units @ $16.00 Date Activities Jan. 1 Beginning inventory Jan. 10 Sales Jan. 20 Purchase Jan. 25 Sales Jan. 30 Purchase Totals 70 units @ $6.00 = 420 85 units @ $16.00 @ $5.50 = 190 units 405 units 1,045 $2,480 190 units The Company uses a perpetual inventory system. For specific identification, ending inventory consists of 215 units, where 190 are from the January 30 purchase, 5 are from the January 20 purchase, and 20 are from beginning inventory. 5. Award: 1.00 point Required: 1. Complete comparative income statements for the month of January for Laker Company for the four inventory methods. Assume expenses are $1,300 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 0 000 Sales Cost of goods sold Gross profit Expenses Income before taxes Income tax expense Net income 000 $ 0 $ 0 $ 0 $ 0

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	145	$7.00	$1,015.00	0	$0.00	$0.00	0	$0.00	$0.00	145	$7.00	$1,015.00
10-Jan	145	$7.00	$1,015.00	0	$0.00	$0.00	105	$7.00	$735.00	40	$7.00	$280.00
20-Jan	40	$7.00	$280.00	70	$6.00	$420.00	0	$0.00	$0.00	40	$7.00	$280.00
										70	$6.00	$420.00
25-Jan	40	$7.00	$280.00	0	$0.00	$0.00	40	$7.00	$280.00	25	$6.00	$150.00
	70	$6.00	$420.00				45	$6.00	$270.00
30-Jan	25	$6.00	$150.00	190	$5.50	$1,045.00	0	$0.00	$0.00	25	$6.00	$150.00
										190	$5.50	$1,045.00
Total							190		$1,285.00	215		$1,195.00

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	145	$7.00	$1,015.00	0	$0.00	$0.00	0	$0.00	$0.00	145	$7.00	$1,015.00
10-Jan	145	$7.00	$1,015.00	0	$0.00	$0.00	105	$7.00	$735.00	40	$7.00	$280.00
20-Jan	40	$7.00	$280.00	70	$6.00	$420.00	0	$0.00	$0.00	40	$7.00	$280.00
										70	$6.00	$420.00
25-Jan	40	$7.00	$280.00	0	$0.00	$0.00	70	$6.00	$420.00	25	$7.00	$175.00
	70	$6.00	$420.00				15	$7.00	$105.00
30-Jan	25	$7.00	$175.00	190	$5.50	$1,045.00	0	$0.00	$0.00	25	$7.00	$175.00
										190	$5.50	$1,045.00
Total							190		$1,260.00	215		$1,220.00

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	145	$7.00	$1,015	0	$0.00	$0	0	$0.00	$0	145	$7.00	$1,015
10-Jan	145	$7.00	$1,015	0	$0.00	$0	105	$7.00	$735	40	$7.00	$280
20-Jan	40	$7.00	$280	70	$6.00	$420	0	$0.00	$0	110	$6.36	$700
25-Jan	110	$6.36	$700	0	$0.00	$0	85	$6.36	$541	25	$6.36	$159
25-Mar	25	$6.36	$159	190	$5.50	$1,045	0	$0.00	$0	215	$5.60	$1,204
Total							190		$1,276	215		$1,204

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	145	$7.00	$1,015	125	$7.00	$875.00	20	$7.00	$140.00
Purchases:
20-Jan	70	$6.00	$420	65	$6.00	$390.00	5	$6.00	$30.00
30-Jan	190	$5.50	$1,045	0	$5.50	$0.00	190	$5.50	$1,045.00
Total	405		$2,480	190		$1,265.00	215		$1,215.00

Income Statement - Laker Company
Particulars	Specific identification	Weighted Average	FIFO	LIFO
Sales	$3,040	$3,040	$3,040	$3,040
Cost of goods sold	$1,265	$1,276	$1,285	$1,260
Gross Profit (Sales - COGS)	$1,775	$1,764	$1,755	$1,780
Expenses	$1,300	$1,300	$1,300	$1,300
Income before taxes	$475	$464	$455	$480
Income tax expense (40%)	$190	$186	$182	$192
Net Income	$285	$278	$273	$288

Solution 2:

Computation of units and cost of goods available for sale
Date	Units available for sale	Rate	Cost of goods available for sale
1-Jan	180	$52.60	$9,468.00
5-Mar	265	$57.60	$15,264.00
18-Mar	125	$62.60	$7,825.00
25-Mar	230	$64.60	$14,858.00
Total	800		$47,415.00