Assume the periodic inventory system is used. Determine the cost assigned to ending inventory and to cost of goods sold using (a) specific identification, (b) weighted average, (c) FIFO, and (d) LIFO. 

1. Compute gross profit for the month of January for Laker Company for the four inventory methods.
2. Which method yields the highest gross profit?
3. Does gross profit using weighted average fall between that using FIFO and LIFO?
4. If costs were rising instead of falling, which method would yield the highest gross profit?

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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 222 units, where 180 are from the January 30 purchase, 5 are from the January 20 purchase. and 37 are from beginning inventory. Date Activities January 1 Beginning inventory January 10 Sales Purchase January 20 January 25 Sales January 30 Purchase. Totals 151 units @ units 71 Units Acquired at Cost $ 5.00 = 180 402 units units $5.00 = $ 4.50 = $ 906 355 818 $ 2,071 Units sold at Retail 89 units @ 91 units @ 180 units $ 15.00 $15.00 Laker Company reported the following January purchases and sales data for its only product. For specific identification, ending Inventory consists of 222 units, where 180 are from the January 30 purchase, 5 are from the January 20 purchase. and 37 are from beginning inventory. Date Activities January 1 Beginning inventory January 10 Sales Purchase January 20 January 25 Sales January 30 Purchase. Totals 151 units @ units 71 Units Acquired at Cost $ 5.00 = 180 402 units units $5.00 = $ 4.50 = $ 906 355 818 $ 2,071 Units sold at Retail 89 units @ 91 units @ 180 units $ 15.00 $15.00

Answer rating: 100% (QA)

To determine the cost assigned to ending inventory and cost of goods sold using specific identification weighted average FIFO and LIFO well calculate ... View the full answer