2. Laker Company reported the following January purchases and sales data for ts

Question

2. Laker Company reported the following January purchases and sales data for ts only product s Sold at R 145 units @$17.20 255 units @$17.20 Date Jan. 1 Beginning inventory 260 units $9.20 $2,392 Jan. 10 Sales Jan 20 Purchase Jan 25 Sales Jan 30 Purchase 330 units 8202,706 200 units $7201,440 790 units Totals $6,538 400 units Laker uses a perpetual inventory system For specific identification, onding invontory consists of 390 units whe ere 200 are ftrom the January 30 purchase, 80 are from tho January 20 purchase, and 110 are from beginning inventory 1. Complote comparative income statemen ts 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 not round your Intermediate calculations.) urne expenses are S2700, and that the applicable income tax rate is 39% (Do LAKER COMPANY Income Statements For Month Ended January 31 Specific Weighted Identification Average FIFO Cost of goods sold Gross profit Expenses Income before taxes Income tax expense Net income

Explanation / Answer

Calculation of cost of good sold under

1 specific identification

Beginning inventory(260-110)=150×9.20=1380

Jan 20 (330-80) =250×8.20=2050

Total=3430

2. Weighted average method

145×9.20=1334

255×8.70*=2219

Total. =3553

*(9.20+8.20)/2=8.70

3. Under FIFO

269×9.20=2392

140×8.20=1148

Total. =3540

4. Under LIFO

145×9.20=1334

255×8.20=2091

Total. =3425

Income statement

Specific

Identification

Weighted

Average

Specific

Identification

Weighted

Average

FIFO LIFO Sales 6880 6880 6880 6880 Cost of good sold 3430 3553 3540 3425 Gross profit 3450 3327 3340 3455 Expenses 2700 2700 2700 2700 Income before tax 750 627 640 755 Income tax(39%) 293 245 250 294 Net income 457 382 390 461

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