Laker Company reported the following January purchases and sales data for its only product. For specific identification, ending inventory consists of 228 units, where 180 are from the January 30 purchase, 5 are from the January 20 purchase, and 43 are from beginning inventory. Date Activities January 1 Beginning inventory January 10 Sales January 20 Purchase 48 January 25 Sales January 30 Purchase Totals 74 units @ 180 units @ 408 units Units Acquired at Cost 154 units @ $ 6.00 = $ 924 $ 5.00 = $ 4.50 = Units sold at Retail 370 94 units @ 86 units @ $ 15.00 $ 15.00 810 $ 2,104 180 units Exercise 5-7A (Algo) Perpetual: Gross profit effects of inventory methods LO P3, A1 Assume the perpetual inventory system is used. Required: 1. Compute gross profit for the month of January for Laker Company for the four inventory methods. 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? Complete this question by entering your answers in the tabs below. Req 1 Req 2 to 4
Laker Company reported the following January purchases and sales data for its only product. For specific identification, ending inventory consists of 228 units, where 180 are from the January 30 purchase, 5 are from the January 20 purchase, and 43 are from beginning inventory. Date Activities January 1 Beginning inventory January 10 Sales January 20 Purchase 48 January 25 Sales January 30 Purchase Totals 74 units @ 180 units @ 408 units Units Acquired at Cost 154 units @ $ 6.00 = $ 924 $ 5.00 = $ 4.50 = Units sold at Retail 370 94 units @ 86 units @ $ 15.00 $ 15.00 810 $ 2,104 180 units Exercise 5-7A (Algo) Perpetual: Gross profit effects of inventory methods LO P3, A1 Assume the perpetual inventory system is used. Required: 1. Compute gross profit for the month of January for Laker Company for the four inventory methods. 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? Complete this question by entering your answers in the tabs below. Req 1 Req 2 to 4
College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter13: Accounting For Merchandise Inventory
Section: Chapter Questions
Problem 1MP: Hurst Companys beginning inventory and purchases during the fiscal year ended December 31, 20-2,...
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Step 1: Introduction of methods of inventory valuation
VIEWStep 2: Computation of cost of goods sold and ending inventory using specific identification:
VIEWStep 3: Computation of cost of goods sold and ending inventory using weighted average:
VIEWStep 4: Computation of cost of goods sold and ending inventory using FIFO:
VIEWStep 5: Computation of cost of goods sold and ending inventory using LIFO:
VIEWStep 6: Working for Income Statement
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