Section Break Luker Compury reported uve folowrrg Junusry ourcheses und sdles ud

Question

Section Break Luker Compury reported uve folowrrg Junusry ourcheses und sdles udd for its only producL Jan. 10 Geles Jon. 20 Purchase Jon. 25 Soles Jon. 30 Purchase 40 unns $6.00. $ 040 60 unns $5.00. 300 180 unns * $ 4.50 . 810 00 urns $15 Toani unts $1.950 Acferences Section Breek Section Break Recuired informstion Exercise 5-6A Perpetual: Income effects of inventory methods LO A1 1. Complete compara ve con e statements or 1ne month of January or La er com an or he our i ven or methods. Assume expenses are $1,250 and anuary 30 purchase, 5 are from the January 20 purchase, and 15 are from beginning inventory. (Round your average cost per unit to 2 decimal places.) a ne a icable income tax rate is 40% For specific de cation, endin inventory consists o 200 unit here 180 are o e Income Statements For Month Ended January 31 Specifi Weighited Gales Cst or goods snld Gross prcfit 0.00 D00 D00 DO0 D O0 Incama baiore taxas Income tax Axpanse Nel income 0.00 0.00 FIFO Speciic idenaficetion Weighted avarage 3. Dces ne: income using weignted average fall beween that using FIFO and LiFO? 9 Yes No 4. I-costs were nsing instead of talling, which method would y1d the highest net income? walgmad avaraga LIFO FIFO

Explanation / Answer

LAKER COMPANY Income Statements For month ended January 31 Specific Identification Weighted average FIFO LIFO Sales (180*15) 2700 2700 2700 2700 Cost of goods sold 1025 1032 1040 1020 Gross profit 1675 1668 1660 1680 Expenses 1250 1250 1250 1250 Income before taxes 425 418 410 430 Income tax expenses (@ 40%) 170 167.2 164 172 Net income 255 250.8 246 258 WN1 - Cost of goods sold = Beginning inventory + Purchases - Ending inventory Specific Identification Weighted average FIFO LIFO Beginning inventory (140*6) 840 840 840 840 Purchases (60*5)+(180*4.5) 1110 1110 1110 1110 Ending inventory 925 918 910 930 (180*4.5)+(5*5)+(15*6) ((5.4*20)+(180*4.5))/(180+20)*200 (20*5)+(180*4.5) (20*6)+(180*4.5) Cost of goods sold 1025 1032 1040 1020

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