Question

exercise 5-3 and 5-5. both go together for excel formating file

USL ULUSULU. UccLUSU Vory Laker Company reported the following January purchases and sales data for its only product. Bercise 5-3 Perpetual Inventory costing methods Date Units Acquired at Cost Units Sold at Retail 140 unitse $6.00 – $ 840 100 units $15 Jan 1 Jan 10 Jan. 20 Jan. 25 Jan. 30 Activities Beginning Inventory... Sales Purchase Sales.... Purchase Totals 50 units $5.00 300 80 units @ $15 18050810 380 units $1.950 180 Required The company uses a perpetual inventory system. Determine the cost assigned to ending inventory and to cost of goods sold using (a) specific identification, (b) weighted average, (e) FIFO, and (d) LIFO. (Round per unit costs and inventory amounts to cents.) For specific identification, ending inventory consists of 200 units, where 180 are from the January 30 purchase, 5 are from the January 20 purchase, and 15 are from beginning inventory. Check Ending inventory LIFO. $930; WA5918 Exercise 5-4 Perpetual: Income effects of inventory methods Use the data in Exercise 5-3 to prepare comparative income statements for the month of January for Laker Company similar to those shown in Exhibit 5.8 for the four inventory methods. Assume expenses are $1,250 and the applicable income tax rate is 40%. (Round amounts to cents.) 1. Which method yields the highest net income? 2. Does net income using weighted average fall above, between, or below that using FIFO and LIFO? 3. If costs were rising instead of falling, which method would yield the highest net income? M Refer to the information in Exercise 5-3 and assume the periodic inventory system is used. Determine the costs assigned to ending inventory and to cost of goods sold using (a) specific identification, (b) weighted average. (c) FIFO, and (d) LIFO. (Round per unit costs and inventory amounts to cents.) For specific identification, ending inventory consists of 200 units, where 180 are from the January 30 purchase. 5 are from the January 20 purchase, and 15 are from beginning inventory Exercise 5-54 Periodic: Inventory costin P3

questions E- 5-3 and E 5-5

Answer 1

5-3

	FIFO	Cost of goods available for sale			Cost of Goods Sold			Ending Balance
Date	Activity	Units	Unit Price	Amount	Units	Unit Price	Amount	Units	Unit Price	Amount
Jan-01	Beginning Inventory	140	$             6.00	$        840.00				140	$      6.00	$ 840.00
Jan-10	Sales				100	$             6.00	$          600.00	40	$      6.00	$ 240.00
Jan-20	Purchase	60	$             5.00	$        300.00				40	$      6.00	$ 240.00
								60	$      5.00	$ 300.00
Jan-25	Sales				40	$             6.00	$          240.00
					40	$             5.00	$          200.00	20	$      5.00	$ 100.00
Jan-30	Purchase	180	$             4.50	$        810.00				20	$      5.00	$ 100.00
								180	$      4.50	$ 810.00
	Total	380		$     1,950.00	180		$      1,040.00	200		$ 910.00
	LIFO	Cost of goods available for sale			Cost of Goods Sold			Ending Balance
Date	Activity	Units	Unit Price	Amount	Units	Unit Price	Amount	Units	Unit Price	Amount
Jan-01	Beginning Inventory	140	$             6.00	$        840.00				140	$      6.00	$ 840.00
Jan-10	Sales				100	$             6.00	$          600.00	40	$      6.00	$ 240.00
Jan-20	Purchase	60	$             5.00	$        300.00				40	$      6.00	$ 240.00
								60	$      5.00	$ 300.00
Jan-25	Sales				60	$             5.00	$          300.00	20	$      6.00	$ 120.00
					20	$             6.00	$          120.00
Jan-30	Purchase	180	$             4.50	$        810.00				20	$      6.00	$ 120.00
								180	$      4.50	$ 810.00
	Total	380		$     1,950.00	180		$      1,020.00	200		$ 930.00
	W.Avg	Cost of goods available for sale			Cost of Goods Sold			Ending Balance
Date	Activity	Units	Unit Price	Amount	Units	Unit Price	Amount	Units	Unit Price	Amount
Jan-01	Beginning Inventory	140	$             6.00	$        840.00				140	$      6.00	$ 840.00
Jan-10	Sales				100	$             6.00	$          600.00	40	$      6.00	$ 240.00
Jan-20	Purchase	60	$             5.00	$        300.00				40	$      6.00	$ 240.00
								60	$      5.00	$ 300.00
								100	$      5.40	$ 540.00
Jan-25	Sales				80	$             5.40	$          432.00	20	$      5.40	$ 108.00
Jan-30	Purchase	180	$             4.50	$        810.00				20	$      5.40	$ 108.00
								180	$      4.50	$ 810.00
								200	$      4.59	$ 918.00
	Total	380		$     1,950.00	180		$      1,032.00	200		$ 918.00
	Sp. ID	Cost of goods available for sale			Cost of Goods Sold			Ending Balance
Date	Activity	Units	Unit Price	Amount	Units	Unit Price	Amount	Units	Unit Price	Amount
Jan-01	Beginning Inventory	140	$             6.00	$        840.00				140	$      6.00	$ 840.00
Jan-10	Sales				100	$             6.00	$          600.00	40	$      6.00	$ 240.00
Jan-20	Purchase	60	$             5.00	$        300.00				40	$      6.00	$ 240.00
								60	$      5.00	$ 300.00
Jan-25	Sales				25	$             6.00	$          150.00	15	$      6.00	$   90.00
					55	$             5.00	$          275.00	5	$      5.00	$   25.00
Jan-30	Purchase	180	$             4.50	$        810.00				15	$      6.00	$   90.00
								5	$      5.00	$   25.00
								180	$      4.50	$ 810.00
	Total	380		$     1,950.00	180		$      1,025.00	200		$ 925.00

5-5

Weighted Average
Average cost per unit = $1950/380 = $5.13
Cost of Goods Sold = 180 x $5.13 = $923 or $924
Ending Inventory = $1950-923 = $1027 or $1026