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

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Accounting

Laker Company reported the following January purchases and salesdata for its only product. Date Activities Units Acquired at CostUnits sold at Retail Jan. 1 Beginning inventory 230 units @ $ 15.50= $ 3,565 Jan. 10 Sales 180 units @ $ 24.50 Jan. 20 Purchase 190units @ $ 14.50 = 2,755 Jan. 25 Sales 220 units @ $ 24.50 Jan. 30Purchase 360 units @ $ 14.00 = 5,040 Totals 780 units $ 11,360 400units The Company uses a perpetual inventory system. For specificidentification, ending inventory consists of 380 units, where 360are from the January 30 purchase, 5 are from the January 20purchase, and 15 are from beginning inventory. Exercise 5-4Perpetual: Income effects of inventory methods LO A1 Required: 1.Complete comparative income statements for the month of January forLaker Company for the four inventory methods. Assume expenses are$2,150, and that the applicable income tax rate is 40%. (Round yourIntermediate calculations to 2 decimal places.) 2.Which method yields the highest net income?

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Solution 1 Computation of ending inventory COGS under FIFO Date Beginning Inventory Purchase Cost of Goods Sold Ending Inventory Qty Rate Amount Qty Rate Amount Qty Rate Amount Qty Rate Amount 1Jan 230 1550 356500 0 000 000 0 000 000 230 1550 356500 10Jan 230 1550 356500 0 000 000 180 1550 279000 50 1550 77500 20Jan 50 1550 77500 190 1450 275500 0 000 000 50 1550 77500 190 1450 275500 25Jan 50 1550 77500 0 000 000 50 1550 77500 20 1450 29000 190 1450 275500 170 1450 246500 30Jan 20 1450 29000 360 1400 504000 0 000 000 20 1450 See Answer

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