Laker Company report.pdf

Laker Company reported the following January purchases and sales data for its only product. Date Jan. 1 Beginning inventory $840 Jan. 10 Sales 100 units @ $15.00 = $1,500 Jan. 20 Purchase 300 Jan. 25 Sales 80 units ...

Laker Company reported the following January purchases and sales data for its only product. Date Jan. 1 Beginning inventory $840 Jan. 10 Sales 100 units @ $15.00 = $1,500 Jan. 20 Purchase 300 Jan. 25 Sales 80 units @ $15.00 = $1,200 Jan. 30 Purchase 810 380 units $1,950 180 units $2,700 60 units @ $5.00 = 180 units @ $4.50 = Activities Units Acquired at Cost Units sold at Retail 140 units @ $6.00 = Laker uses a perpetual inventory system. Complete comparative income statements for the month of January for Laker Company for the four inventory methods. Assume expenses are $1,250, and that the applicable income tax rate is 40%. For specific identification, ending inventory consists of 200 units, where 180 are from the January 30 purchase, 5 are from the January 20 purchase, and 15 are from the beginning inventory. Exercise  5-­‐4  5-2 Date Jan. 1 Beginning inventory $840 Jan. 10 Sales 100 units @ $15.00 = $1,500 Jan. 20 Purchase 300 Jan. 25 Sales 80 units @ $15.00 = $1,200 Jan. 30 Purchase 810 380 units $1,950 180 units $2,700 60 units @ $5.00 = 180 units @ $4.50 = For specific identification, ending inventory consists of 200 units, where 180 are from the January 30 purchase, 5 are from the January 20 purchase, and 15 are from beginning inventory. Activities Units Acquired at Cost Units sold at Retail 140 units @ $6.00 = Date Activity Units Unit Cost Units Sold Unit Cost COGS Ending Inventory Units Cost per Unit Ending Inventory Cost Jan. 1 Beg. Inv. 140 $6.00 125 $6.00 $750 15 $6.00 $90 Jan. 20 Purchase 60 $5.00 55 $5.00 275 5 $5.00 25 Jan. 30 Purchase 180 $4.50 0 $4.50 0 180 $4.50 810 $1,025 $925 Specific identification. Available for Sale Cost of Goods Sold Ending Inventory Specific Weighted Identification Average FIFO LIFO Sales $2,700 Cost of goods sold 1,025 Gross profit 1,675 Operating expenses 1,250 Income before tax 425 Income tax expense (40%) 170 Net income $255 Income Statements For Month Ended January 31 Laker Company Exercise  5-­‐4  5-3 Date # of units Cost per unit Inventory Value Units Sold Unit Cost COGS Beginning inventory 140 $6.000 $840 Sale - Jan. 10 (100) $6.000 (600) 100 $6.000 $600 Subtotal Average Cost 40 $6.000 240 Purchase - January 20 60 $5.000 300 Subtotal Average Cost 100 $5.400 540 Sale - Jan. 25 (80) $5.400 (432) 80 $5.400 432 Subtotal Average Cost 20 $5.400 108 Purchase - January 30 180 $4.500 810 Total 200 $4.590 $918 180 $1,032 Weighted average Inventory on hand Cost of Goods Sold Date Jan. 1 Beginning inventory $840 Jan. 10 Sales 100 units @ $15.00 = $1,500 Jan. 20 Purchase 300 Jan. 25 Sales 80 units @ $15.00 = $1,200 Jan. 30 Purchase 810 380 units $1,950 180 units $2,700 60 units @ $5.00 = 180 units @ $4.50 = Activities Units Acquired at Cost Units sold at Retail 140 units @ $6.00 = Specific Weighted Identification Average FIFO LIFO Sales $2,700 $2,700 Cost of goods sold 1,025 1,032 Gross profit 1,675 1,668 Operating expenses 1,250 1,250 Income before tax 425 418 Income tax expense (40%) 170 167 Net income $255 $251 Income Statements For Month Ended January 31 Laker Company Exercise  5-­‐4  5-4 Available for Sale Date Units Unit Cost Units Sold Unit Cost COGS Units Sold Unit Cost COGS Units in Ending Inventory Unit Cost Ending Inventory Value Beginning Inv. 140 $6.00 100 $6.00 $600 40 $6.00 $240 0 $6.00 $0 Purchases: Jan. 20 60 $5.00 40 $5.00 200 20 $5.00 100 Jan. 30 180 $4.50 180 $4.50 810 $600 $440 200 $910 Cost of Goods Sold - January 10 Cost of Goods Sold - January 25 Ending Inventory Perpetual FIFO Date Jan. 1 Beginning inventory $840 Jan. 10 Sales 100 units @ $15.00 = $1,500 Jan. 20 Purchase 300 Jan. 25 Sales 80 units @ $15.00 = $1,200 Jan. 30 Purchase 810 380 units $1,950 180 units $2,700 60 units @ $5.00 = 180 units @ $4.50 = Activities Units Acquired at Cost Units sold at Retail 140 units @ $6.00 = Specific Weighted Identification Average FIFO LIFO Sales $2,700 $2,700 $2,700 Cost of goods sold 1,025 1,032 1,040 Gross profit 1,675 1,668 1,660 Operating expenses 1,250 1,250 1,250 Income before tax 425 418 410 Income tax expense (40%) 170 167 164 Net income $255 $251 $246