Accounting

Walberg Associates, antique dealers, purchased the contents of an estate for $38,700. Terms of the purchase were FOB shipping point, and the cost of transporting the goods to Walberg Associates' warehouse was $1,800. Walberg Associates insured the shipment at a cost of $270. Prior to putting the goods up for sale, they cleaned and refurbished them at a cost of $610.

Determine the cost of the inventory acquired from the estate

Laker Company reported the following January purchases and sales data for its only product.

Date

Activities

Units Acquired at Cost

Units Sold at Retail

Jan.

Beginning inventory

160

units

@ $7.20

1,152

Jan.

Sales

units

@$15.20

Jan.

Purchase

230

units

@ $6.20

1,426

Jan.

Sales

155

units

@$15.20

Jan.

Purchase

100

units

@ $5.20

520

Totals

490

units

3,098

250

units

Laker uses a perpetual inventory system. For specific identification, ending inventory consists of 240 units, where 100 are from the January 30 purchase, 80 are from the January 20 purchase, and 60 are from beginning inventory.

1.	Complete comparative income statements for the month of January for Laker Company for the four inventory methods. Assume expenses are $1,700, and that the applicable income tax rate is 35%. (Do not round your Intermediate calculations.)

Which method yields the highest net income?

[removed]	FIFO
[removed]	Specific identification
[removed]	LIFO
[removed]	Weighted average

Does net income using weighted average fall between that using FIFO and LIFO?

[removed]	Yes
[removed]	No

If costs were rising instead of falling, which method would yield the highest net income?

[removed]	Weighted average
[removed]	FIFO
[removed]	LIFO
[removed]	Specific identification

13 years ago

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