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Required information Skip to question [The following information applies to the questions displayed below.] Laker Company reported the following January purchases and sales data for
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[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 270 units from the January 30 purchase, 5 units from the January 20 purchase, and 15 units from beginning inventory.
Date | Activities | Units Acquired at Cost | Units sold at Retail | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
January 1 | Beginning inventory | 180 | units | @ | $ 10.50 | = | $ 1,890 | ||||
January 10 | Sales | 140 | units | @ | $ 19.50 | ||||||
January 20 | Purchase | 110 | units | @ | $ 9.50 | = | 1,045 | ||||
January 25 | Sales | 130 | units | @ | $ 19.50 | ||||||
January 30 | Purchase | 270 | units | @ | $ 9.00 | = | 2,430 | ||||
Totals | 560 | units | $ 5,365 | 270 | 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? 4. If costs were rising instead of falling, which method would yield the highest gross profit?
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