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 1.60 in allsmall business loans. When you ask which inventory costing method the covenantassumes, the previous loans manager gives you a blank look. To explain to him that acompany's inventory costing method is important, you present the following balancesheet information. Current assets other than inventory $ 33 Inventory (a) Other (noncurrent) assets 149 Total assets $ (b) Current liabilities $ 52 Other (noncurrent)liabilities 67 Stockholders' equity (d) Total liabilities and stockholders' equity $ (c) Youask the former loans manager to find amounts for (a), (b), (c), and (d) assuming thecompany began the year with 4 units of inventory at a unit cost of $13, then purchased 7units at a cost of $14 each, and finally purchased 5 units at a cost of $18 each. A year -end inventory count determined that 3 units are on hand. Determine the amount for (a)using Weighted Average, and then calculate (b) through (d).

The weighted average method of inventory calculates the average cost per unit based on the total…

Answered: end inventory count determined that 3…

end inventory count determined that 3 units are on hand. Determine the amount for (a) using Weighted Average, and then calculate (b) through (d).

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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