Suppose you are considering investing in two businesses, Tiger Woods Enterpes and Phil Mickelson Systems. The two companies are virtually identical, and he began operations at the beginning of the current year. During the year, each con! pany purchased inventory as follows: Jan. 4 Apr. 6 Aug. 9 Nov. 27 Totals 10,000 units at $4 = $ 40,000 5,000 units at S = 25,000 7,000 units at 6 = 42,000 10.000 units at 7 = _70.000 32,000 $177,000 During the first year, both companies sold 25,000 units of inventory. In early January, both companies purchased equipment costing $143,000 (10-ye estimated useful life and a $20,000 residual value). Woods uses the inventory and depreciation methods that maximize reported income (FIFO and straight-line). 1 contrast, Mickelson uses the inventory and depreciation methods that minimal income taxes (LIFO and double-declining-balance). Both companies' trial balance at December 31 included the following: Sales revenue...... Operating expenses $270,000 80,700 Requirements 1. Prepare both companies' income statements. (p. 346) 2. Write an investment letter to address the following questions for your clienee Which company appears to be more profitable? Which company has more cash to invest in new projects? Which company would you prefer to invest in Why? (pp. 320-321) Format your investment letter as follows: INVESTMENT LETTER To: Our clients From: Student Name Subject Selecting Tiger Woods Enterprises or Phil Mickelson Systems for a long-term investment