Required information The following information applies to the questions displaye

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. Date AcEivities Units Acquired at Cost Units sold at Retail Beginning 240 unitse $16.50- 3,960 170 unitse $15.582,635 380 unitse $15.00-5,780 Jan. 1 inventory 190 units e $25.50 Jan.10 Sales Jan. 20 Purchase Jan. 25 Sales Jan. 30 Purchase 190 units $25.50 Totals 790 units $12,295 380 units The Company uses a perpetual inventory system. For specific identification, ending inventory consists of 410 units, where 380 are from the January 30 purchase, 5 are from the January 20 purchase, and 25 are from beginning I

Explanation / Answer

LAKER COMPANY Income Statements For Month Ended January 31 Specific Weighted Identification Average FIFO LIFO Sales $9,690 $9,690 $9,690 $9,690 Cost of goods sold 6,105 6,175 6,130 6,100 Gross profit $3,585 $3,515 $3,560 $3,590 Expenses 2,250 2,250 2,250 2,250 Income before taxes $1,335 $1,265 $1,310 $1,340 Income tax expense $534.0 $506.0 $524.0 $536.0 Net income $801.0 $759.0 $786.0 $804.0 Explanation: Sales 190*25.5+190*25.5 = 9690 Specific identification: COGS= 165*15.5+215*16.5 = 6105 FIFO 140*15.5+240*16.5 = 6130 LIFO 170*15.5+210*16.5 = 6100 Weighted average Beginning Inventory 240 16.5 3960 Sale 190 16.5 3135 50 16.5 825 Purchase 170 15.5 2635 Subtotal Average cost (16.5+15.5)/2 220 16 3520 Sale 190 16 3040 Subtotal Average cost (16.5+15.5)/2 30 16 480 Purchase 380 15 5700 Subtotal Average cost (16+15)/2 410 15.5 6355 Ending Inventory 410 15.5 6355 12530 COGS == 190*16.5+190*16 = 6175 2 Which method yields the highest net income? LIFO 3 Does net income using weighted average fall between that using FIFO and LIFO? No 4 If costs were rising instead of falling, which method would yield the highest net income?

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.