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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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
Transcribed Image Text:Cruz Company uses LIFO for inventory costing and reports the following financial data. It also recomputed inventory and cost of goods
sold using FIFO for comparison purposes.
LIFO inventory
LIFO cost of goods sold
FIFO inventory
FIFO cost of goods sold
Current assets (using LIFO)
Current assets (using FIFO)
Current liabilities
1. Compute its current ratio, inventory turnover, and days' sales in inventory for Year 2 using (a) LIFO numbers and (b) FIFO numbers.
Current ratio
Inventory turnover
Days' sales in inventory
(a) Compute its current ratio, inventory turnover, and days' sales in inventory for Year 2 using LIFO
numbers.
Numerator 1
Current ratio
Inventory turnover
Days' sales in inventory
$
$
$
Year 2
$ 180
760
250
715
240
310
175
✔
Numerator 1
7
$
S
$
Year 1
$ 130
700
155
700
210
235
155
Denominator
$
$
$
(b) Compute its current ratio, inventory turnover, and days' sales in inventory for Year 2 using FIFO
numbers.
Denominator
$
$
$
=
Ratio
to 1
times
days
=
Ratio
to 1
times
days
Expert Solution
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