Required information The following information applies to the questions displaye

Question

Required information The following information applies to the questions displayed below.] Laker Company reported the following January purchases and sales data for its only product. Date an. 1 Beginning inventory Jan. 10 Sales Jan. 20 Purchase Jan. 25 Sales Jan. 30 Purchase Activities Units sold at Retail 100 units $15 80 units e 15 Units Acquired at Cost 140 units $6.00$ 840 60 units $5.00300 180 units @ $4.50= 380 units 810 $1,950 180 units Totals The Company uses a perpetual inventory system. For specific identification, ending inventory consists of 200 units, where 180 are from the January 30 purchase, 5 are from the January 20 purchase, and 15 are from beginning Inventory Required: 1. Complete comparative income statements for the month of January for Laker Company for the four inventory methods. Assume expenses are $1.250, and that the applicable income tax rate is 40%. (Round your Intermediate calculations to 2 decimal places.)

Explanation / Answer

Under FIFO, ending inventory of 200 units (380-180) will be 180 units from purchases made on Jan.30 at $4.50 per unit and 20 units form purchases made on Jan 20 at $5.00 per unit

Ending Inventory under FIFO = (180 units*$4.50)+(20 units*$5.00)

= $810+$100 = $910

Under LIFO, ending inventory of 200 units (380-180) will be 180 units from purchases made on Jan.30 at $4.50 per unit and 20 units form beginning inventory at $6.00 per unit

Ending Inventory under LIFO = (180 units*$4.50)+(20 units*$6.00)

= $810+$120 = $930

Weighted Average Cost per unit = Cost of goods available for sale/Units available for sale

= $1,950/380 units = $5.13158

Ending Inventory under Weighted Aerage Method = 200 units*$5.13158 = $1,026

Under Specific identification method, cost of ending inventory is calculated as follows:-

Ending Inventory = (180 units*$4.50)+(5 units*$5)+(15 units*$6)

= $810+$25+$90 = $925

Calculation of Cost of goods sold (Amounts in $)

Income Statement (Amounts in $)

Sales = Units sold*Sale price per unit

= 180 units*$15 per unit = $2,700

Particulars FIFO LIFO Weighted Average Specific Identification Method *Cost of goods sold Equation Beginning Inventory 840 840 840 840 Add: Purchases 1,110 1,110 1,110 1,110 Goods Available for Sale 1,950 1,950 1,950 1,950 Less: Ending Inventory (910) (930) (1,026) (925) Cost of Goods sold 1,040 1,020 924 1,025

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.