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 270 units from the January 30 purchase, 5 units from th January 20 purchase, and 15 units from beginning inventory. Date January 1 Activities Beginning inventory January 10 Sales January 20 Purchase January 25 Sales January 30 Purchase Totals Units Acquired at Cost 180 units @ $ 10.50 = 110 units @ 270 units @ 560 units Units sold at Retail $ 1,890. 140 units @ $ 19.50 $ 9.50 = 1,045 130 units @ $ 19.50 $ 9.00 = 2,430 $ 5,365 270 units 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?
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 270 units from the January 30 purchase, 5 units from th January 20 purchase, and 15 units from beginning inventory. Date January 1 Activities Beginning inventory January 10 Sales January 20 Purchase January 25 Sales January 30 Purchase Totals Units Acquired at Cost 180 units @ $ 10.50 = 110 units @ 270 units @ 560 units Units sold at Retail $ 1,890. 140 units @ $ 19.50 $ 9.50 = 1,045 130 units @ $ 19.50 $ 9.00 = 2,430 $ 5,365 270 units 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?
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter6: Inventories
Section: Chapter Questions
Problem 5PB: Pappas Appliances uses the periodic inventory system. Details regarding the inventory of appliances...
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