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

		Available for sale				Cost of goods sold			Ending inventory
		Date	Activity	Units	Unit cost	Units sold	Unit cost	COGS	Ending inventory units	Cost per unit	Ending inventory cost
		Jan 1	185	11	2,035	175	11	1,925	10	11	110
		Jan 20	100	10	1,000	95	10	950	5	10	50
		Jan 30	270	9.5	2,565	-	9.5	-	270	9.5	2,565
								2,875			2,725
			555			270			285
			Laker Company
			Income statement
			For month ended January 31
			Sales			5,400
			(145*20) + (125*20)
			Cost of goods sold			2,875
			Gross profit			2,525
			Operating expenses			1,700
			Income before tax			825
			Income tax expenses (825*40%)			330
			Net income			495