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 205 units @ $13.00 = $ 2,665 Jan. 10 Sales 165 units @ $22.00 Jan. 20 Purchase 140 units @ $12.00 = 1,680 Jan. 25 Sales 145 units @ $22.00 Jan. 30 Purchase 310 units @ $11.50 = 3,565     Totals 655 units $ 7,910 310 units 1.The Company uses a perpetual inventory system. For specific identification, ending inventory consists of 345 units, where 310 are from the January 30 purchase, 5 are from the January 20 purchase, and 30 are from beginning inventory. Determine the cost assigned to ending inventory and to cost of goods sold using (a) specific identification, (b) weighted average, (c) FIFO, and (d) LIFO. (Round weighted average cost per unit to 2 decimal places.) 2. Complete comparative income statements for the month of January for Laker Company for the four inventory methods. Assume expenses are $1,900, and that the applicable income tax rate is 40%. For specific identification, ending inventory consists of 345 units, where 310 are from the January 30 purchase, 5 are from the January 20 purchase, and 30 are from beginning inventory. (Round your average cost per unit to 2 decimal places.)

Answer 1

STATEMENT SHOWING INVENTORY RECORD UNDER PERPETUAL FIFO METHOD
	RECIEPTS			COST OF GOODS SOLD			BALANCE
DATE	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $
1-Jan							205	13	2665
10-Jan				165	13	2145	40	13	520
20-Jan	140	12	1680				40	13	520
							140	12	1680
25-Jan				40	13	520
				105	12	1260	35	12	420
30-Jan	310	11.5	3565				35	12	420
							310	11.5	3565
TOTAL	450		5245	310		3925	345		3985
STATEMENT SHOWING INVENTORY RECORD UNDER PERPETUAL LIFO METHOD
	RECIEPTS			COST OF GOODS SOLD			BALANCE
DATE	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $
1-Jan							205	13	2665
10-Jan				165	13	2145	40	13	520
20-Jan	140	12	1680				40	13	520
							140	12	1680
25-Jan				140	12	1680
				5	13	65	35	13	455
30-Jan	310	11.5	3565				35	13	455
							310	11.5	3565
TOTAL	450		5245	310		3890	345		4020
STATEMENT SHOWING INVENTORY RECORD UNDER PERPETUAL WEIGHTED AVERAGE METHOD
	RECIEPTS			COST OF GOODS SOLD			BALANCE
DATE	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $
1-Jan							205	13	2665
10-Jan				165	13	2145	40	13	520
20-Jan	140	12	1680				40	13	520
							140	12	1680
AVERAGE							180	12.22	2200
25-Jan				145	12.22	1772	35	12.22	428
30-Jan	310	11.5	3565				35	12.22	428
							310	11.5	3565
AVERAGE							345	11.57	3993
TOTAL	450		5245	310		3917	345	11.57	3993
STATEMENT SHOWING INVENTORY RECORD UNDER SPECIFIC IDENTIFICATION
	RECIEPTS			COST OF GOODS SOLD			BALANCE
DATE	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $
Balance Oct1	205	13	2665	175	13	2275	30	13	390
Purchasse
20-Jan	140	12	1680	135	12	1620	5	12	60
30-Jan	310	11.5	3565				310	11.5	3565
TOTAL	450		5245	310		3895	345		4015
Req 1					FIFO	LIFO	WEIGHTED	SPECIFIC
	Ending Inventory				3985	4020	3993	4015
	Cost of Goods sold				3925	3890	3917	3895
Req 2					FIFO	LIFO	WEIGHTED	SPECIFIC
	Sales (310 units@$22 per unit)				6820	6820	6820	6820
	Less: Cost of goods sold				3925	3890	3917	3895
	Gross margin				2895	2930	2903	2925
	Less: expense				1900	1900	1900	1900
	Net Income before tax				995	1030	1003	1025
	Less: Tax @40%				398	412	401.2	410
	Net Income after tax				597	618	601.8	615