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Laker Company reported the following January purchases and sales data for its only product. The Company uses a perpetual inventory system. For specific identification, ending inventory consists of 370 units from the January 30 purchase, 5 units from the January 20 purchase, and 15 units from beginning inventory. Date January 1 January 10 January 20 January 25 January 30 Activities Beginning inventory Sales Purchase Sales Purchase Totals Units Acquired at Cost 220 units @ $14.50 = @ @ 170 units 370 units 760 units $ 13.50 = $ 13.00 = $ 3,190 2,295 4,810 $ 10,295 Units sold at Retail 6:13 170 units 200 units 370 units 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? @ @ $23.50 $23.50

Laker Company reported the following January purchases and sales data for its only product. The Company uses a perpetual inventory system. For specific identification, ending inventory consists of 370 units from the January 30 purchase, 5 units from the January 20 purchase, and 15 units from beginning inventory. Date January 1 January 10 January 20 January 25 January 30 Activities Beginning inventory Sales Purchase Sales Purchase Totals Units Acquired at Cost 220 units @ $14.50 = @ @ 170 units 370 units 760 units $ 13.50 = $ 13.00 = $ 3,190 2,295 4,810 $ 10,295 Units sold at Retail 6:13 170 units 200 units 370 units 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? @ @ $23.50 $23.50

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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### Required Information **[The following information applies to the questions displayed below.]** Laker Company reported the following January purchases and sales data for its only product. The company uses a perpetual inventory system. For specific identification, ending inventory consists of 370 units from the January 30 purchase, 5 units from the January 20 purchase, and 15 units from the beginning inventory. | Date | Activities | Units Acquired at Cost | Units Sold at Retail | |--------------|----------------------|------------------------|----------------------------| | January 1 | Beginning inventory | 220 units @ $14.50 | $3,190 | | January 10 | Sales | | 170 units @ $23.50 | | January 20 | Purchase | 170 units @ $13.50 | $2,295 | | January 25 | Sales | | 200 units @ $23.50 | | January 30 | Purchase | 370 units @ $13.00 | $4,810 | | **Totals** | | **760 units** | **$10,295** | ### Questions 1. Compute the gross profit for the month of January for Laker Company using 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?
Transcribed Image Text:### Required Information **[The following information applies to the questions displayed below.]** Laker Company reported the following January purchases and sales data for its only product. The company uses a perpetual inventory system. For specific identification, ending inventory consists of 370 units from the January 30 purchase, 5 units from the January 20 purchase, and 15 units from the beginning inventory. | Date | Activities | Units Acquired at Cost | Units Sold at Retail | |--------------|----------------------|------------------------|----------------------------| | January 1 | Beginning inventory | 220 units @ $14.50 | $3,190 | | January 10 | Sales | | 170 units @ $23.50 | | January 20 | Purchase | 170 units @ $13.50 | $2,295 | | January 25 | Sales | | 200 units @ $23.50 | | January 30 | Purchase | 370 units @ $13.00 | $4,810 | | **Totals** | | **760 units** | **$10,295** | ### Questions 1. Compute the gross profit for the month of January for Laker Company using 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?
### Educational Resource: Computing Gross Profit Using Different Inventory Methods **Task Description:** Complete the question by entering your answers in the tabs below. **Objective:** Compute gross profit for the month of January for Laker Company using four inventory methods. (Round the cost per unit to 2 decimal places and final answers to the nearest whole dollar.) **Data Table: Laker Company** | **LAKER COMPANY** | **For Month Ended January 31** | **Specific Identification** | **Weighted Average** | **FIFO** | **LIFO** | |------------------|--------------------------------|-----------------------------|----------------------|----------|---------| | **Sales** | | $ | $ | $ | $ | | **Cost of goods sold** | | $ | $ | $ | $ | | **Gross profit** | | $ 0 | $ 0 | $ 0 | $ 0 | **Instructions:** - Calculate the gross profit using the Specific Identification, Weighted Average, FIFO, and LIFO methods. - Ensure all calculations are rounded correctly: cost per unit to two decimal places, and final results to the nearest whole dollar. **Navigation:** - Use the tab labeled "Req 2 to 4" to continue with further requirements after initial computations. This exercise demonstrates how different inventory valuation methods can impact financial results. It is crucial for understanding cost flow assumptions and their implications on reporting and decision-making in accounting.
Transcribed Image Text:### Educational Resource: Computing Gross Profit Using Different Inventory Methods **Task Description:** Complete the question by entering your answers in the tabs below. **Objective:** Compute gross profit for the month of January for Laker Company using four inventory methods. (Round the cost per unit to 2 decimal places and final answers to the nearest whole dollar.) **Data Table: Laker Company** | **LAKER COMPANY** | **For Month Ended January 31** | **Specific Identification** | **Weighted Average** | **FIFO** | **LIFO** | |------------------|--------------------------------|-----------------------------|----------------------|----------|---------| | **Sales** | | $ | $ | $ | $ | | **Cost of goods sold** | | $ | $ | $ | $ | | **Gross profit** | | $ 0 | $ 0 | $ 0 | $ 0 | **Instructions:** - Calculate the gross profit using the Specific Identification, Weighted Average, FIFO, and LIFO methods. - Ensure all calculations are rounded correctly: cost per unit to two decimal places, and final results to the nearest whole dollar. **Navigation:** - Use the tab labeled "Req 2 to 4" to continue with further requirements after initial computations. This exercise demonstrates how different inventory valuation methods can impact financial results. It is crucial for understanding cost flow assumptions and their implications on reporting and decision-making in accounting.
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