Required information [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 3.00 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. Current assets other than inventory Inventory Other (noncurrent) assets Total assets Current liabilities Other (noncurrent) liabilities Stockholders' equity Total liabilities and stockholders' equity $ 15 (a) 117 $ (b) $ 46 54 (d) $ (c) You ask the former loans manager to find amounts for (a), (b), (c), and (d) assuming the company began the year with 7 units of inventory at a unit cost of $14, then purchased 10 units at a cost of $15 each, and finally purchased 8 units at a cost of $19 each. A year-end inventory count determined that 7 units are on hand. 4. Determine the current ratios using (1) FIFO, (ii) Weighted Average, and (iii) LIFO. (Round your answers to 2 decimal places.) FIFO Weighted Average LIFO Current Ratio
Required information [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 3.00 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. Current assets other than inventory Inventory Other (noncurrent) assets Total assets Current liabilities Other (noncurrent) liabilities Stockholders' equity Total liabilities and stockholders' equity $ 15 (a) 117 $ (b) $ 46 54 (d) $ (c) You ask the former loans manager to find amounts for (a), (b), (c), and (d) assuming the company began the year with 7 units of inventory at a unit cost of $14, then purchased 10 units at a cost of $15 each, and finally purchased 8 units at a cost of $19 each. A year-end inventory count determined that 7 units are on hand. 4. Determine the current ratios using (1) FIFO, (ii) Weighted Average, and (iii) LIFO. (Round your answers to 2 decimal places.) FIFO Weighted Average LIFO Current Ratio
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![Required information
[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 3.00 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.
Current assets other than inventory
Inventory
Other (noncurrent) assets
Total assets
Current liabilities
Other (noncurrent) liabilities
Stockholders' equity
Total liabilities and stockholders' equity
$ 15
(a)
117
$ (b)
$ 46
54
(d)
$ (c)
You ask the former loans manager to find amounts for (a), (b), (c), and (d) assuming the company began the year with 7
units of inventory at a unit cost of $14, then purchased 10 units at a cost of $15 each, and finally purchased 8 units at a cost
of $19 each. A year-end inventory count determined that 7 units are on hand.
4. Determine the current ratios using (1) FIFO, (ii) Weighted Average, and (iii) LIFO. (Round your answers to 2 decimal places.)
FIFO
Weighted Average
LIFO
Current
Ratio](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F93b20189-160f-4a1d-aa1d-3bb270dec6cb%2F49b828e4-f500-4382-8e38-f89dfefc258f%2Ftjpdcqw_processed.png&w=3840&q=75)
Transcribed Image Text:Required information
[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 3.00 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.
Current assets other than inventory
Inventory
Other (noncurrent) assets
Total assets
Current liabilities
Other (noncurrent) liabilities
Stockholders' equity
Total liabilities and stockholders' equity
$ 15
(a)
117
$ (b)
$ 46
54
(d)
$ (c)
You ask the former loans manager to find amounts for (a), (b), (c), and (d) assuming the company began the year with 7
units of inventory at a unit cost of $14, then purchased 10 units at a cost of $15 each, and finally purchased 8 units at a cost
of $19 each. A year-end inventory count determined that 7 units are on hand.
4. Determine the current ratios using (1) FIFO, (ii) Weighted Average, and (iii) LIFO. (Round your answers to 2 decimal places.)
FIFO
Weighted Average
LIFO
Current
Ratio
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 5 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education