Question# 3 Xiomi Co. is a retailer dealing in a single product. Beginning inventory at January 1 of this year is zero, operating expenses for this same year are $5,000, and there are 2,000 common shares outstanding. The following purchases are made this year: Units 100 January March June October December Total 300 600 300 500 1800 Per Unit $ 10 11 12 14 15 Cost $ 1.000 3,300 7,200 4,200 7,500 23.200 Ending inventory at December 31 is 800 units. End-of-year assets, excluding inventories, amount to $75,000, of which $50,000 of the $75,000 are current. Current liabilities amount to $25,000, and long-term liabilities equal $10,000. Required: a) Determine net income for this year under each of the following inventory methods. Assume a sales price of $25 per unit and ignore income taxes. i) FIFO ii) LIFO iii) Average cost b) Compute the following ratios under each of the inventory methods of FIFO, LIFO, and average cost. i) Current ratio ii) Debt-to-equity ratio iii) Inventory turnover iv) Return on total assets v) Gross margin as a percent of sales vi) Net profit as a percent of sales c) Discuss the effects of inventory accounting methods for financial statement analysis given the results from parts (a) and (b)