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 |
|
220 |
units |
@ $8.40 |
= |
$ |
1,848 |
|
|
|
|
|
|
Jan. |
10 |
|
Sales |
|
|
|
|
|
|
|
|
125 |
units |
@$16.40 |
|
|
Jan. |
20 |
|
Purchase |
|
290 |
units |
@ $7.40 |
= |
|
2,146 |
|
|
|
|
|
|
Jan. |
25 |
|
Sales |
|
|
|
|
|
|
|
|
215 |
units |
@$16.40 |
|
|
Jan. |
30 |
|
Purchase |
|
160 |
units |
@ $6.40 |
= |
|
1,024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals |
|
670 |
units |
|
|
$ |
5,018 |
|
340 |
units |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Laker uses a perpetual inventory system. For specific identification, ending inventory consists of 330 units, where 160 are from the January 30 purchase, 80 are from the January 20 purchase, and 90 are from beginning inventory.
|
| 1. |
Complete comparative income statements for the month of January for Laker Company for the four inventory methods. Assume expenses are $2,300, and that the applicable income tax rate is 35%. (Do not round your Intermediate calculations.)
|
|
|
| 2. |
Which method yields the highest net income?
|
|
|
|
|
Specific identification |
|
LIFO |
|
Weighted average |
|
FIFO |
|
| 3. |
Does net income using weighted average fall between that using FIFO and LIFO?
|
|
|
|
|
| 4. |
If costs were rising instead of falling, which method would yield the highest net income?
|
|
|
|
|
Weighted average |
|
Specific identification |
|
FIFO |
|
LIFO |
|