Required information Use the following information for the Exercises below. [The

Question

Required information Use the following information for the Exercises below. [The following information applies to the questions displayed below] Laker Company reported the following January purchases and sales data for its only product an. 1 Beginning Inventory175 units $18. Jan. 10 Sales Dan. 20 Purchase 3an. 25 Sales an. 30 Purchase ts sold at Retail 135 units$19.e 140 units$19.0 $1, 130 units@ $ 9.00 1,17 250 units@ $ 8.5-2,125 Totals 555 units $5,045 275 units The Company uses a perpetual inventory system For specific identification, ending inventory 250 are from the January 30 purchase. 5 are from the January 20 consists of 280 units, where se and 25 are from beginning inventory Exercise 5-4 Perpetual: Income effects of inventory methods LO A1 Required: 1. Complete comparative income statements for t expenses are $1.600, and that the applicable income tax rate is 40%(Round your Intermediate calculations the month of January for Laker Company for the four inventory methods. Assume to 2 decimal places) 70, 9 Next > F10 F11 F12 F7 8 5 0

Explanation / Answer

LAKER COMPANY Income Statement For the month ended Jan Particulars Specific Weighted FIFO LIFO Identification Average Sales 5225 5225 5225 5225 Less: COGS 2625 2,500 2650 2350 Gross Profit 2600 2725 2575 2875 Expense 1600 1600 1600 1600 Income before taxes 1000 1125 975 1275 Income Tax Expense 400 450 390 510 Net Income 600 675 585 765 Working Note: 1 Sales for All Method: Total Sold Units 275 135*19 2565 140*19 2660 Total 5225 2 Cost of Goods Sold(COGS): 3 FIFO: Units Rate Amt COGS: Units Rate Amt Beginning Inventory 175 10.00 1750 Beginning Inventory 175 10.00 1750 Purchase-Jun 20 130 9.00 1170 Purchase-Jun 20 100 9.00 900 Purchase-Jun 30 250 8.50 2125 (275-100) 275 2650 555 5045 4 LIFO: Specific Method-Closing Inventory: Amt COGS: Units Rate Amt 250 Units * 8.50 2125 Purchase-Jun 30 250 8.5 2125 5 Units * 9.00 45 Purchase-Jun 20 25 9.00 225 25 Units * 10 250 (275-250) 275 2350 Closing Inventory 2420 COGS(5225-2420) 2625 Weighted Average: Units Rate Amt Beginning Inventory 175 10.00 1750 Purchase-Jun 20 130 9.00 1170 Purchase-Jun 30 250 8.50 2125 555 9.09 5045 (5045/555) COGS 275 9.09 2,500

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