Accounting
Waqas Ahmed (Not rated)
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10.
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| 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. | 1 | Beginning inventory | 260 | units | @ $9.20 | = | $ | 2,392 | ||||||||
| Jan. | 10 | Sales | 145 | units | @$17.20 | |||||||||||
| Jan. | 20 | Purchase | 330 | units | @ $8.20 | = | 2,706 | |||||||||
| Jan. | 25 | Sales | 255 | units | @$17.20 | |||||||||||
| Jan. | 30 | Purchase | 200 | units | @ $7.20 | = | 1,440 | |||||||||
| Totals | 790 | units | $ | 6,538 | 400 | units | ||||||||||
Laker uses a perpetual inventory system. For specific identification, ending inventory consists of 390 units, where 200 are from the January 30 purchase, 80 are from the January 20 purchase, and 110 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 $2,700, and that the applicable income tax rate is 39%. (Do not round your Intermediate calculations.) |
| 2. | Which method yields the highest net income? | ||||||||
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| 3. | Does net income using weighted average fall between that using FIFO and LIFO? | ||||
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| 4. | If costs were rising instead of falling, which method would yield the highest net income? | ||||||||
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13 years ago
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