Use the data in Exercise 6-3 to prepare comparative income statements for the month of January for Park Company similar to those shown in Exhibit 6.8 for the four inventory methods. Assume expenses are $1,600, and that the applicable income tax rate is 30%.
1. Which method yields the highest net income?
2. Does net income using weighted average fall between that using FIFO and LIFO?
3. If costs were rising instead of falling, which method would yield the highest net income?
Park Company reported the following March purchases and sales data for its only product.
Park 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, (c) FIFO, and (d) LIFO. (Round per unit costs to three decimals, but inventory balances to the dollar.) For specific identification, ending inventory consists of 225 units, where 90 are from the March 30 purchase, 80 are from the March 20 purchase, and 55 are from beginning inventory.