Chapter 6, Problem 4E

Exercise 6-4
Perpetual: Income effects of inventory methods
AIG
Use the data in Exercise 6-3 to prepare comparative income statements for the month of January for Laker Company similar to those shown in Exhibit
for the four inventory methods. Assume expenses are $1,250, and that the applicable income tax rate is 40%. (Round amounts to cents.)
1. Which method yields the highest net income?
2. Does net income using weighted average fall above, between, or below that using FIFO and LIFO?
3. If costs were rising instead of falling, which method would yield the highest net income?