Required information

[The following information applies to the questionsdisplayed below.]
  
Laker Company reported the following January purchases and salesdata for its only product.
  

Date		Activities	Units Acquired at Cost								Units sold at Retail
Jan.	1	Beginning inventory	210	units	@	$	13.50	=	$	2,835
Jan.	10	Sales										160	units	@	$	22.50
Jan.	20	Purchase	150	units	@	$	12.50	=		1,875
Jan.	25	Sales										160	units	@	$	22.50
Jan.	30	Purchase	320	units	@	$	12.00	=		3,840
		Totals	680	units					$	8,550		320	units

For specific identification, ending inventory consists of 360units, where 320 are from the January 30 purchase, 5 are from theJanuary 20 purchase, and 35 are from beginning inventory.

Required:

1. Prepare comparative income statements forthe month of January for Laker Company for the four inventorymethods. Assume expenses are $1,950, and that the applicable incometax rate is 40%.

2. Which method yields the highest netincome?

3. Does net income using weighted average fallabove, between, or below that using FIFO and LIFO?

4. If costs were rising instead of falling,which method would yield the highest net income?

Complete this question by entering your answers in thetabs below.

• Required 1
• Required 2
• Required 3
• Required 4

Prepare comparative income statements for the month of Januaryfor Laker Company for the four inventory methods. Assume expensesare $1,950, and that the applicable income tax rate is 40%. (Roundyour average cost per unit to 2 decimal places.)

	LAKER COMPANY Income Statements For Month Ended January 31 Specific Weighted Identification Average FIFO LIFO Sales $7,200.00 $7,200.00 $7,200.00 $7,200.00 Cost of goods sold Gross profit $7,200.00 $7,200.00 $7,200.00 $7,200.00 Expenses Income before taxes $7,200.00 $7,200.00 $7,200.00 $7,200.00 Income tax expense Net income $7,200.00 $7,200.00 $7,200.00 $7,200.00