Page 1 > of 8 ZOOM + L Question #1 (15 Points) Presented below are the condensed financial statements of Excel Athletics: Year 1 EXCEL ATHLETICS Condensed Balance Sheel (Amounts in thousands Year 2 Assets Current assets (excluding inventory $2,520.0 Inventory 5,011.0 Noncurrent assets 8,6070 Total assets $15 1330 $3,048.0 5.250.0 9.996.0 $18 2940 Liabilities and sharehokiers quity Current liabilities Noncurrent liabilities Total liabilities Common stock Retained earnings Total liabilities and shareholders' equity 53 050 0 240020 6,042.0 1,431.0 8.605.0 $15.138 0 $50850 2.913.0 7.993.0 540.0 9.750.0 $18 2940 Year 1 EXCEL ATHLETICS Condensed Income Statement (Amounts in thousands) Year 2 Sales $22,8390 Cost of goods sold 18,515.0 Selling general, administrative expenses 2.145.0 Income taxes __702.0 Net income $ 1.4770 $25,794,0 20.872.0 2.532.0 6980 $ 1.6940 The footnotes to the financial statements reveal that the company uses LIFO to account for its inventary and that the value of the company's LIFO reserve was as follows: Amounts in thousands Year 2 Year 1 LIFO Reserve $1,128 $1,015 A Restate the company's net income for Year 2 to relect the use of FIFO instead of LIFO Assume an effective tax rate of 30 percent B. Assuming a change to FIFO is made for income tax purposes, how much will income taxes change for Your 2? C Calculate the new balances of the company's balance sheet accounts as of December 31, Year 2 to reflect a change to FIFO. D. Calculate the current ratio for Year 2 under FIFO and LIFO. Under which inventary method does the company appear more quid? Page 1 > of 8 ZOOM + L Question #1 (15 Points) Presented below are the condensed financial statements of Excel Athletics: Year 1 EXCEL ATHLETICS Condensed Balance Sheel (Amounts in thousands Year 2 Assets Current assets (excluding inventory $2,520.0 Inventory 5,011.0 Noncurrent assets 8,6070 Total assets $15 1330 $3,048.0 5.250.0 9.996.0 $18 2940 Liabilities and sharehokiers quity Current liabilities Noncurrent liabilities Total liabilities Common stock Retained earnings Total liabilities and shareholders' equity 53 050 0 240020 6,042.0 1,431.0 8.605.0 $15.138 0 $50850 2.913.0 7.993.0 540.0 9.750.0 $18 2940 Year 1 EXCEL ATHLETICS Condensed Income Statement (Amounts in thousands) Year 2 Sales $22,8390 Cost of goods sold 18,515.0 Selling general, administrative expenses 2.145.0 Income taxes __702.0 Net income $ 1.4770 $25,794,0 20.872.0 2.532.0 6980 $ 1.6940 The footnotes to the financial statements reveal that the company uses LIFO to account for its inventary and that the value of the company's LIFO reserve was as follows: Amounts in thousands Year 2 Year 1 LIFO Reserve $1,128 $1,015 A Restate the company's net income for Year 2 to relect the use of FIFO instead of LIFO Assume an effective tax rate of 30 percent B. Assuming a change to FIFO is made for income tax purposes, how much will income taxes change for Your 2? C Calculate the new balances of the company's balance sheet accounts as of December 31, Year 2 to reflect a change to FIFO. D. Calculate the current ratio for Year 2 under FIFO and LIFO. Under which inventary method does the company appear more quid