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Laker Company reported the following January purchases and sales data for its only product. For specific identification, ending inventory consists of 400 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
230
units
@
$ 15.50
=
$ 3,565
January 10
Sales
180
units
@
$ 24.50
January 20
Purchase
190
units
@
$ 14.50
=
2,755
January 25
Sales
220
units
@
$ 24.50
January 30
Purchase
400
units
@
$ 14.00
=
5,600
Totals
820
units
$ 11,920
400
units
Compute gross profit for the month of January for Laker Company for the four inventory methods.
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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