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Submitted by Waqas on Sun, 2013-10-20 05:28
due on Sun, 2013-10-20 14:00
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Accounting

Accounting

1)

 

Walberg Associates, antique dealers, purchased the contents of an estate for $38,700. Terms of the purchase were FOB shipping point, and the cost of transporting the goods to Walberg Associates' warehouse was $1,800. Walberg Associates insured the shipment at a cost of $270. Prior to putting the goods up for sale, they cleaned and refurbished them at a cost of $610.

   

Determine the cost of the inventory acquired from the estate

 

 

2)

 

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

  

DateActivitiesUnits Acquired at CostUnits Sold at Retail
 Jan.1 Beginning inventory 160 units @  $7.20=$1,152     
 Jan.10 Sales        95 units @$15.20 
 Jan.20 Purchase 230 units @  $6.20= 1,426     
 Jan.25 Sales        155 units @$15.20 
 Jan.30 Purchase 100 units @  $5.20= 520     
      

  

 

  
      Totals 490 units  $3,098 250 units  
      



  



 



  

  

Laker uses a perpetual inventory system. For specific identification, ending inventory consists of 240 units, where 100 are from the January 30 purchase, 80 are from the January 20 purchase, and 60 are from beginning inventory.

  

1.

Complete comparative income statements for the month of January for Laker Company for the four inventory methods. Assume expenses are $1,700, and that the applicable income tax rate is 35%. (Do not round your Intermediate calculations.)

 

2.

Which method yields the highest net income?

  
 
FIFO
Specific identification
LIFO
Weighted average

  

3.

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

  
 
Yes
No

  

4.

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

  
 
Weighted average
FIFO
LIFO
Specific identification
Answer
Submitted by Waqas on Sun, 2013-10-20 05:30
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