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 Activities Units Acquired at Cost 225 units @$15.00 3,375 Units sold at Retail Date 1 Beginning inventory Jan. 175 units $24.00 Sales T 180 units @$14.00 2,520 ase 210 units $24.00 Jan. 25 Sales 385 units @$13.0e0 Jan. 30 Purchase 5,e05 790 units $10,900 385 units Totals Required: 1. Complete comparative income statements for the month of January for Laker Company using the periodic inventory system for the four inventory methods. Assume expenses are $2,100, and that the applicable income tax rate is 40%. (Round your average cost per unit to 2 decimal places.) LAKER COMPANY Income Statements For Month Ended January 31 Specific Weighted Identification Average FIFO LIFO Sales Cost of goods sold Gross profit Expenses Income before taxes Income tax expense Net income

Answer 1

Weighted Average

Beginning Inventory	225.00	$    3,375.00
Purchase	565.00	$    7,525.00
Total	790.00	$ 10,900.00

Unit cost = 10,900/790

=13.80

Particulars	Amount
Cost of goods sold (385 units x $13.80)	$          5,312
Ending inventory (405 Units x $13.80)	$          5,588

FIFO

Ending Inventory

From Jan 20 purchase (20 units x $14)	$280
From Jan 30 purchase - (385 units x $13)	5,005
Total	$5,285

Cost of Goods Sold

=10,900 - 5,285 = 5,615

LIFO

Ending Inventory

From Jan 20 purchase (180 units x $14)	$2,520
From Jan 10 purchase - (225 units x $15)	$     3,375.00
Total	$5,895

Cost of Goods Sold

=10,900 - 5,895 = 5,005

LAKER COMPANY
Income Statements
For Month Ended January 31
	Weighted Average	FIFO	LIFO
Sales	$                      9,240.00	$ 9,240.00	$ 9,240.00
Cost of Goods Sold	$                      5,312.00	$ 5,615.00	$ 5,005.00
Gross Profit	$                      3,928.00	$ 3,625.00	$ 4,235.00
Expenses	$                      2,100.00	$ 2,100.00	$ 2,100.00
Income Before taxes	$                      1,828.00	$ 1,525.00	$ 2,135.00
Income tax Expense	$                         731.20	$     610.00	$     854.00
Net Income	$                      1,096.80	$     915.00	$ 1,281.00