C7-1 (Static) Computing and Evaluating Financial Statement Effects of Alternative Inventory Costing Methods (Chapters 2 and 7) [LO 2-5, LO 7-3]

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[The following information applies to the questions displayed below.] You have been given responsibility for overseeing a banks small business loans division. The bank has included loan covenants requiring a minimum current ratio of 1.80 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 companys inventory costing method is important, you present the following balance sheet information.

Current assets other than inventory	$ 10
Inventory	(a)
Other (noncurrent) assets	107
Total assets	$ (b)
Current liabilities	$ 36
Other (noncurrent) liabilities	44
Stockholders equity	(d)
Total liabilities and stockholders equity	$ (c)

You ask the former loans manager to find amounts for (a), (b), (c), and (d) assuming the company began the year with 5 units of inventory at a unit cost of $11, then purchased 8 units at a cost of $12 each, and finally purchased 6 units at a cost of $16 each. A year-end inventory count determined that 4 units are on hand.

Determine the amount for (a) using Weighted Average, and then calculate (b) through (d).

Determine the amount for (a) using LIFO, and then calculate (b) through (d).

Determine the current ratios using (i) FIFO, (ii) Weighted Average, and (iii) LIFO. (Round your answers to 2 decimal places.)

\begin{tabular}{|l|l|} \hline Inventory & \\ \hline Total Assets & Amount \\ \hline Total Liabilities and Stockholders' Equity & \\ \hline Stockholders' Equity & \\ \hline \end{tabular} \begin{tabular}{|l|l|} \hline & \\ \hline Inventory & \\ \hline Total Assets & \\ \hline Total Liabilities and Stockholders' Equity & \\ \hline Stockholders' Equity & \\ \hline \end{tabular}