Laker Company reported the following January purchases and sales data for its only product. For specific identification, ending inventory consists of 380 units from the January 30 purchase, 5 units from the January 20 purchase, and 25 units from beginning inventory.

Date

Activities

January 1

Beginning inventory

January 10

January 20

Sales

Purchase

January 25

January 30

Sales

Purchase

Fotals

Units Acquired at Cost 240 units @ $16.50 =

$ 3,960

@ @ $ 15.50 = 2,635

190 units

$ 25.50

170 units

380 units

190 units @

@

$ 15.00 =

5,700

$25.50

790 units

Units sold at Retail

$ 12,295 380 units

Assume the periodic inventory system is used.

Required:

1. Compute gross profit for the month of January for Laker Company for the four inventory methods using the periodic inventory system.

2. Which method yields the highest gross profit?

3. Does gross profit using weighted average fall between that using FIFO and LIFO? 4. If costs were rising instead of falling, which method would yield the highest gross profit?

Required information Use the following information for the Exercises 3-7 below. (Algo) [The following information applies to the questions displayed below.] Laker Company reported the following January purchases and sales data for its only product. For specific identification, ending inventory consists of 380 units from the January 30 purchase, 5 units from the January 20 purchase, and 25 units from beginning inventory. Exercise 5-7A (Algo) Periodic: Gross profit effects of inventory methods LO P3, A1 Assume the periodic inventory system is used. Required: 1. Compute gross profit for the month of January for Laker Company for the four inventory methods using the periodic inventory system. 2. Which method yields the highest gross profit? 3. Does gross profit using weighted average fall between that using FIFO and LIFO? 4. If costs were rising instead of falling, which method would yield the highest gross profit