Lakewood Company sold 5,000 units of its product at $50 per unit during the year

Question

Lakewood Company sold 5,000 units of its product at $50 per unit during the year ended December 31, 2016; 1,600 were sold on February 16th, 1,400 were sold May 9th and 2,000 sold on December 12th. It incurred operating expenses of $10 per unit in selling the product. It began the year with 600 units in inventory and made successive purchases of the product as follows: Prepare a comparative income statement for the company showing in adjacent columns the net incomes earned from the sale of the product assuming the company uses a perpetual inventory system and prices its ending inventory on the basis of: (a) FIFO, (b) LIFO, and (c) Weighted Average (rounded to three decimal places). 2) Determine the total cost of ending inventory under each of the above cost flow assumptions.

Explanation / Answer

Calculations:

1) COMPARATIVE INCOME STATEMENT FIFO LIFO WT.AVG Sales 250000 250000 250000 Less COGS 109000 111300 109667 Gross Profit 141000 138700 140333 Operating expenses 50000 50000 50000 Net Income 91000 88700 90333 2) Ending inventory 12500 10200 11833

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