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Use the following information for the Exercises $3-7$ below. $($Algo$)$

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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. For specific identification, ending inventory consists of $385$ 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 $225$ units @ $ $15\mathrm{.}00=$ $ $3,375$

January $10$ Sales $175$ units @ $ $24\mathrm{.}00$

January $20$ Purchase $180$ units @ $ $14\mathrm{.}00=2,520$

January $25$ Sales $210$ units @ $ $24\mathrm{.}00$

January $30$ Purchase $385$ units @ $ $12\mathrm{.}00=4,620$

Totals $790$ units $ $10,515385$ units

Exercise $5-7$A $($Algo$)$ Periodic: Gross profit effects of inventory methods LO P$3,$ A$1$

Assume the periodic inventory system is used.

Required:

Compute gross profit for the month of January for Laker Company for the four inventory methods using the periodic inventory system.

Which method yields the highest gross profit?

Does gross profit using weighted average fall between that using FIFO and LIFO?

If costs were rising instead of falling, which method would yield the highest gross profit?

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