Case 1. (Learning Objectives 2, 3: Measuring profitability based on different inventory and depreciation methods) Suppose you are considering investing in two businesses, La Petite France Bakery and Burgers Ahoy. The two companies are virtually identical, and both began operations at the beginning of the current year. During the year, each company purchased in- ventory as follows: Jan 4 Apr 6 Aug 9 Nov 27 Totals 10,000 units at $4 = 5,000 units at $5 = 7,000 units at $6 = 10,000 units at $7 = 32.000 40,000 25,000 42,000 70.000 During the first year, both companies sold 28,000 units of inventory. In early January, both companies purchased equipment costing $180,000 that had a 10-year estimated useful life and a $30,000 residual value. La Petite France uses the inventory and depreciation methods that maximize reported income. By contrast, Burgers uses the inventory and depreciation methods that minimize income tax payments. Assume that both companies' trial balances at December 31 included the following: alcs revenue.. --------.............. Sales revenue Operating expenses................ $350,000 50,000 The income tax rate is 35%. Requirements: w 1. Complete both companies' Income statement on the Excel schedule) 2. Write an investment newsletter to address the following questions : 2.1) Which company appears the most profitable 2.2) Which company has more cash to invest in promising projects 2.3) If prices continue rising over the long term, which company would you prefer to invest in ? Why