C$7-1($Algo$)$ Computing and Evaluating Financial Statement Effects of Alternative Inventory Costing Methods $($Chapters $2$ and $7)[$LO $2-5,$ LO $7-3]$

$[$The following information applies to the questions displayed below.$]$

You have been given responsibility for overseeing a bank's small business loans division. The bank has included loan covenants requiring a minimum current ratio of $1\mathrm{.}20$ in all small business loans. When you ask which inventory costing method the covenant assumes, the previous loans manager gives you a blank look. To explain to him that a company's inventory costing method is important, you present the following balance sheet information.

$\backslash$table$[[\backslash$table$[[$Current assets other than inventory$],[$Inventory$]],,\backslash$table$[[\backslash$table$[[$$$19$