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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.

Date			Activities	Units Acquired at Cost								Units sold at Retail
Jan.	1		Beginning inventory	210	units	@	$	13.50	=	$	2,835
Jan.	10		Sales										160	units	@	$	22.50
Jan.	20		Purchase	150	units	@	$	12.50	=		1,875
Jan.	25		Sales										180	units	@	$	22.50
Jan.	30		Purchase	320	units	@	$	12.00	=		3,840
			Totals	680	units					$	8,550		340	units

The Company uses a perpetual inventory system. For specific identification, ending inventory consists of 340 units, where 320 are from the January 30 purchase, 5 are from the January 20 purchase, and 15 are from beginning inventory.

Required: 1. Complete comparative income statements for the month of January for Laker Company for the four inventory methods. Assume expenses are $1,950 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?

multiple choice 1

• FIFO

• Specific identification

• LIFO

• Weighted average

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

multiple choice 2

• Yes

• No

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

multiple choice 3

• FIFO

• Weighted average

• Specific identification

• LIFO

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

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