Question

Laker Company reported the following January purchases and sales data for its only product.

Date			Activities	Units Acquired at Cost								Units sold at Retail
Jan.	1		Beginning inventory	185	units	@	$	11.00	=	$	2,035
Jan.	10		Sales										145	units	@	$	20.00
Jan.	20		Purchase	100	units	@	$	10.00	=		1,000
Jan.	25		Sales										125	units	@	$	20.00
Jan.	30		Purchase	270	units	@	$	9.50	=		2,565
			Totals	555	units					$	5,600		270	units

The Company uses a perpetual inventory system. For specific identification, ending inventory consists of 285 units, where 270 are from the January 30 purchase, 5 are from the January 20 purchase, and 10 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 $1,700, and that the applicable income tax rate is 40%. (Round your Intermediate calculations to 2 decimal places.)

Answer 1

Calculate cost of goods sold under Four method :

	FIFO	LIFO	Weighted average	Specific indentification
Cost of goods sold	(185*11+85*10)=2885	(145*11+100*10+25*11)=2870	(145*11+10.29*125)=2881	(95*10+175*11)=2875

1. Complete comparative income statements for the month of January for Laker Company for the four inventory methods.

	FIFO	LIFO	Weighted average	Specific identification
Sales	5400	5400	5400	5400
Cost of goods sold	(2885)	(2870)	(2881)	(2875)
Gross profit	2515	2530	2519	2525
Expenses	(1700)	(1700)	(1700)	(1700)
Income before tax	815	830	819	825
Taxes	(326)	(332)	(328)	(330)
Net income	489	498	491	495