Required information

Use the following information for the Exercises below.

[The following information applies to the questionsdisplayed below.]

Laker Company reported the following January purchases and salesdata for its only product.

Date			Activities	Units Acquired at Cost								Units sold at Retail
Jan.	1		Beginning inventory	145	units	@	$	7.00	=	$	1,015
Jan.	10		Sales										105	units	@	$	16.00
Jan.	20		Purchase	70	units	@	$	6.00	=		420
Jan.	25		Sales										85	units	@	$	16.00
Jan.	30		Purchase	190	units	@	$	5.50	=		1,045
			Totals	405	units					$	2,480		190	units

The Company uses a perpetual inventory system. For specificidentification, ending inventory consists of 215 units, where 190are from the January 30 purchase, 5 are from the January 20purchase, and 20 are from beginning inventory.

rev: 03_14_2019_QC_CS-162819

Exercise 5-4 Perpetual: Income effects of inventory methods LOA1

Required:

1. Complete comparative income statements for the month ofJanuary for Laker Company for the four inventory methods. Assumeexpenses are $1,300, and that the applicable income tax rate is40%. (Round your Intermediate calculations to 2 decimalplaces.)

2. Which method yields the highest netincome?

• LIFO

• FIFO

• Weighted average

• Specific identification

3. Does net income using weighted average fallbetween that using FIFO and LIFO?

• No

• Yes

4. If costs were rising instead of falling, whichmethod would yield the highest net income?

• FIFO

• Specific identification

• Weighted average

• LIFO