Homestead Crafts, a distributor of handmade gifts, operates out of owner Emma Finns house. At the end of the current period, Emma looks over her
Homestead Crafts, a distributor of handmade gifts, operates out of owner Emma Finns house. At the end of the current period, Emma looks over her inventory and finds that she has
- 900 units (products) in her basement, 24 of which were damaged by water and cannot be sold.
- 140 units in her van, ready to deliver per a customer order, terms FOB destination.
- 120 units out on consignment to a friend who owns a retail store.
How many units should Emma include in her companys period-end inventory?
A car dealer acquires a used car for $20,000, with terms FOB shipping point. Compute total inventory costs assigned to the used car if additional costs include
- $300 for transportation-in.
- $140 for shipping insurance.
- $880 for car import duties.
- $130 for advertising.
- $1,000 for sales staff salaries.
- $170 for trimming shrubs.
Required: 1. Complete the table to determine the cost assigned to ending inventory and cost of goods sold using specific identification. 2. Determine the cost assigned to ending inventory and to cost of goods sold using weighted average. 3. Determine the cost assigned to ending inventory and to cost of goods sold using FIFO. 4. Determine the cost assigned to ending inventory and to cost of goods sold using LIFO.
Required: 1. Complete comparative income statements for the month of January for Laker Company for the four inventory methods. Assume expenses are $2,150 and that the applicable income tax rate is 40%. (Round your Intermediate calculations to 2 decimal places.)
2. Which method yields the highest net income?
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LIFO
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Specific identification
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Weighted average
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FIFO
3. Does net income using weighted average fall between that using FIFO and LIFO?
4. If costs were rising instead of falling, which method would yield the highest net income?
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LIFO
-
Weighted average
-
Specific identification
-
FIFO
Units in Ending Inventory: Units of Product on hand: Add: 900 units Less: Total units in period-end inventory units Included in Inventory Cost Expensed as incurred Cost $ Transportation-in Import duties Insurance during shipment Cost 20,000 300 880 140 130 1,000 170 22,620 Advertising Sales staff salaries Trimming shrubs Total $ 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. Units sold at Retail Units Acquired at Cost 230 units@ $15.50 = $ 3,565 180 units @ $24.50 Date Activities Jan. 1 Beginning inventory Jan. 10 Sales Jan. 20 Purchase Jan. 25 Sales Jan. 30 Purchase Totals 190 units@ $14.50 = 2,755 220 units @ $24.50 360 units@ $14.00 = 780 units 5,040 $ 11,360 400 units The Company uses a perpetual inventory system. For specific identification, ending inventory consists of 380 units, where 360 are from the January 30 purchase, 5 are from the January 20 purchase, and 15 are from beginning inventory. Required 1 Required 2 Required 3 Required 4 Complete the table to determine the cost assigned to ending inventory and cost of goods sold using specific identification. (Round places.) Specific Identification Available for Sale Cost of Goods Sold Purchase Date Ending Inventory Ending Ending Cost Per Inventory- Inventory- Unit Units Cost Activity Unit Cost Units Units Sold Unit Cost COGS Beginning inventory Jan. 1 Jan. 20 Jan. 30 Purchase 230 190 360 Purchase 780 Required 1 Required 2 Required 3 Required 4 IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII Determine the cost assigned to ending inventory and to cost of goods sold using weighted average. (Round cost p IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII Inventory Balance ! Weighted Average - Perpetual: Goods Purchased # of Cost per Date units # of units sold Cost of Goods Sold Cost per Cost of Goods unit Sold # of units Cost per unit Inventory Balance unit January 1 230 @ $ 15.500 = $ 3,565.00 January 10 January 20 | Average cost January 25 | DCT | I January 30 Totals Required 1 Required 2 Required 3 Required 4 Determine the cost assigned to ending inventory and to cost of goods sold using FIFO. (Round cost per unit to 2 decimal places.).. Perpetual FIFO: Inventory Balance Goods Purchased # of Cost per units unit Cost of Goods Sold # of units Cost per Cost of Goods sold unit Sold Date # of units Inventory Balance Cost per unit $ 15.50 - January 1 230 @ $ 3,565.00 January 10 January 20 January 25 January 30 Totals Required 2 Required 4 > Required 1 Required 2 Required 3 Required 4 Determine the cost assigned to ending inventory and to cost of goods sold using LIFO. (Round cost per unit to 2 decimal Perpetual LIFO: Goods Purchased # of Cost per units unit Cost of Goods Sold # of units Cost per Cost of Goods sold unit Sold Date Inventory Balance # of units Cost per Inventory unit Balance 230 @ $ 15.50 = $ 3,565.00 January 1 January 10 January 20 January 25 January 30 Totals Required 3 Required 4 ) 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. Units sold at Retail Units Acquired at Cost 230 units@ $15.50 = $ 3,565 180 units @ $24.50 Date Activities Jan. 1 Beginning inventory Jan. 10 Sales Jan. 20 Purchase Jan. 25 Sales Jan. 30 Purchase Totals 190 units@ $14.50 = 2,755 220 units @ $24.50 360 units@ $14.00 = 780 units 5,040 $11,360 400 units The Company uses a perpetual inventory system. For specific identification, ending inventory consists of 380 units, where 360 are from the January 30 purchase, 5 are from the January 20 purchase, and 15 are from beginning inventory. LAKER COMPANY Income Statements For Month Ended January 31 Specific Weighted Identification Average FIFO LIFO Sales Cost of goods sold Gross profit Expenses Income before taxes Income tax expense Net income
