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28 Sep 2019
Laker Company reported thefollowing January purchases and sales data for its onlyproduct.
Date Activities Units Acquired at Cost Units Sold at Retail Jan. 1 Beginning inventory 190 units @ $7.80 = $ 1,482 Jan. 10 Sales 110 units @$15.80 Jan. 20 Purchase 260 units @ $6.80 = 1,768 Jan. 25 Sales 185 units @$15.80 Jan. 30 Purchase 130 units @ $5.80 = 754 Totals 580 units $ 4,004 295 units
Laker uses a perpetual inventory system. For specificidentification, ending inventory consists of 285 units, where 130are from the January 30 purchase, 80 are from the January 20purchase, and 75 are from beginning inventory.
1. Complete comparative income statements for the month of Januaryfor Laker Company for the four inventory methods. Assume expensesare $2,000, and that the applicable income tax rate is 35%.(Do not round your Intermediate calculations.)
2. Which method yields the highest net income?
Weighted average LIFO FIFO Specificidentification
3. Does net income using weighted average fall between that usingFIFO and LIFO?
Yes No
4. If costs were rising instead of falling, which method wouldyield the highest net income?
FIFO Specificidentification LIFO Weightedaverage
Laker Company reported thefollowing January purchases and sales data for its onlyproduct. |
Date | Activities | Units Acquired at Cost | Units Sold at Retail | |||||||||||||
Jan. | 1 | Beginning inventory | 190 | units | @ $7.80 | = | $ | 1,482 | ||||||||
Jan. | 10 | Sales | 110 | units | @$15.80 | |||||||||||
Jan. | 20 | Purchase | 260 | units | @ $6.80 | = | 1,768 | |||||||||
Jan. | 25 | Sales | 185 | units | @$15.80 | |||||||||||
Jan. | 30 | Purchase | 130 | units | @ $5.80 | = | 754 | |||||||||
Totals | 580 | units | $ | 4,004 | 295 | units | ||||||||||
Laker uses a perpetual inventory system. For specificidentification, ending inventory consists of 285 units, where 130are from the January 30 purchase, 80 are from the January 20purchase, and 75 are from beginning inventory. |
1. | Complete comparative income statements for the month of Januaryfor Laker Company for the four inventory methods. Assume expensesare $2,000, and that the applicable income tax rate is 35%.(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 usingFIFO and LIFO? | ||||
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4. | If costs were rising instead of falling, which method wouldyield the highest net income? | ||||||||
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Beverley SmithLv2
28 Sep 2019