f Ch 8: Homework Question 2 of 4 - 12 View Policies Current Attempt in Progress Astro Languet established Bridgeport Products Co. as a sole proprietorship on January 5, 2020. At the company's year end of December 31, 2020, the accounts had the following balances (in thousands): Current assets, excluding inventory $ 11 Other assets 123 Current liabilities 34 Long-term bank loan 57 Owner's investment (excluding income) 46 Purchases during year Jan. 2: 5,700 @ $ 11 62.70 June 30: 9,120 @ $ 12 109.44 Dec. 10:6,840 @ $ 16 109.44 281.58 + Ch 8: Homework Question 2 of 4 -12 III CI. 2. JUU 11 June 30: 9,120 @ $ 12 109.44 Dec. 10:6,840 @ $ 16 109.44 281.58 Sales 324.58 Other expenses 46.00 A count of ending inventory on December 31, 2020, showed there were 4,560 units on hand. Astro is now preparing financial statements for the year. He is aware that inventory may be costed using the FIFO or weighted average cost formula. He is unsure of which one to use and asks for your assistance. In discussions with Astro, you learn the following. 1. Suppliers to Bridgeport Products provide goods at regular prices as long as Bridgeport Products' current ratio is at least 2 to 1. If this ratio is lower, the suppliers increase their price by 10% in order to compensate for what they consider to be a substantial credit risk. 2. The terms of the long-term bank loan include the bank's ability to demand immediate repayment of the loan if the debt to total assets ratio is greater than 45%. 3. Astro thinks that for the company to be a success, the rate of return on total assets should be at least 30% f Ch 8: Homework Question 2 of 4 -72 E 3. Astro thinks that, for the company to be a success, the rate of return on total assets should be at least 30%. 4. Astro has an agreement with the company's only employee that, for each full percentage point above a 25% rate of return on total assets, she will be given an additional one day off with pay in the following year. Part 1 Prepare an income statement and a year-end SFP, assuming the company applies: (1) the FIFO cost formula and (2) the weighted average cost formula. (Enter amounts in thousands. List Current Assets in order of liquidity. Round weighted average cost and final answers to 2 decimal places, e.g. 52.75.) Statement of income FIFO W $ $ $ f Ch 8: Homework Question 2 of 4 -72 III average cost formula. (Enter amounts in thousands. List Current Assets in order of liquidity. Round weighted average cost and final answers to 2 decimal places, e.g. 52.75.) Statement of income FIFO $ $ $ vi $ f Ch 8: Homework Question 2 of 4 -72 III average cost formula. (Enter amounts in thousands. List Current Assets in order of liquidity. Round weighted average cost and final answers to 2 decimal places, e.g. 52.75.) FIFO Weighted Average $ $ $ $ $ $ + Ch 8: Homework Question 2 of 4 -/2 SEP FIFO Weighted Average $ $ $ > $
