Requirement 1 (a)
The amount of inventory using FIFO.
Requirement 1 (a)
Explanation of Solution
Calculate the amount of inventory:
Requirement 1 (b)
The amount of total assets using FIFO.
Requirement 1 (b)
Explanation of Solution
Calculate the amount of total assets:
Requirement 1 (c)
The amount of total liabilities and stockholders’ equity using FIFO.
Requirement 1 (c)
Explanation of Solution
Calculate the amount of total liabilities and
Requirement 1 (d)
The amount of stockholders’ equity using FIFO.
Requirement 1 (d)
Explanation of Solution
Calculate the amount of stockholders’ equity:
Requirement 2 (a)
The amount of inventory using weighted average.
Requirement 2 (a)
Explanation of Solution
Calculate the amount of inventory using weighted average:
Step 1: Calculate the weighted average cost per unit.
Step 2: Calculate the amount of inventory using weighted average.
Requirement 1 (b)
The amount of total assets using weighted average.
Requirement 1 (b)
Explanation of Solution
Calculate the amount of total assets using weighted average:
Requirement 1 (c)
The amount of total liabilities and stockholders’ equity using weighted average.
Requirement 1 (c)
Explanation of Solution
Calculate the amount of total liabilities and stockholders’ equity:
Requirement 1 (d)
The amount of stockholders’ equity using weighted average.
Requirement 1 (d)
Explanation of Solution
Calculate the amount of stockholders’ equity:
Requirement 3 (a)
The amount of inventory using LIFO.
Requirement 3 (a)
Explanation of Solution
Calculate the amount of inventory:
Requirement 3 (b)
The amount of total assets using LIFO.
Requirement 3 (b)
Explanation of Solution
Calculate the amount of total assets:
Requirement 3 (c)
The amount of total liabilities and stockholders’ equity using LIFO.
Requirement 3 (c)
Explanation of Solution
Calculate the amount of total liabilities and stockholders’ equity:
Requirement 3 (d)
The amount of stockholders’ equity using LIFO.
Requirement 3 (d)
Explanation of Solution
Calculate the amount of stockholders’ equity:
Requirement 4 (i)
The current ratio using FIFO.
Requirement 4 (i)
Explanation of Solution
Calculate the current ratio:
Requirement 4 (ii)
The current ratio using weighted average.
Requirement 4 (ii)
Explanation of Solution
Calculate the current ratio:
Requirement 4 (iii)
The current ratio using LIFO.
Requirement 4 (iii)
Explanation of Solution
Calculate the current ratio:
The ratios are differing due to the inventory costing method assigned. Under FIFO method inventory is computed using the higher last–in costs, however, LIFO is using the lower first–in costs, and weighted average being an average of all costs.
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Chapter 7 Solutions
FUNDAMENTALS OF FINANCIAL ACCOUNTING
- 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 1.40 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 $ 27 (a) 141 $ (b) Inventory Total Assets Total Liabilities and Stockholders' Equity Stockholders' Equity $70 78 (d) (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…arrow_forwardS 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 1.40 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 $ 27 (a) 141 $ (b) $ 70 78 (d) $ (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 $14, then purchased 8 units at a cost of $15 each, and finally purchased…arrow_forwardRequired 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 1.40 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 Answer is not complete. Inventory Total Assets Total Liabilities and Stockholders' Equity Stockholders' Equity Amount $ $ 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…arrow_forward
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