Question

The Shirt Shop had the following transactions for T-shirts for Year 1, its first year of operations: Jan. 20 Purchased Apr. 21 Purchased July 25 Purchased Sept. 19 Purchased 400 units 200 unita 280 units 90 units @ @ @ $8 - $3,200 $10 = 2,000 $13 3,640 $15 - 1,350 During the year, The Shirt Shop sold 810 T-shirts for $20 each. Required a. Compute the amount of ending inventory The Shirt Shop would report on the balance sheet, assuming the following cost flow assumptions: (1) FIFO, (2) LIFO, and (3) weighted average. b. Compute the difference in gross margin between the FIFO and LIFO cost flow assumptions. Complete this question by entering your answers in the tabs below. Required a Required B Compute the amount of ending Inventory The Shirt Shop would report on the balance sheet, assuming the following cost flow assumptions: (1) FIFO, (2) UFO, and (3) weighted average. (Round intermediate calculations to 2 decimal places and final answers to nearest whole dollar amount.) FIFO LIFO Ending inventory Weighted Average Required 3 > < Prev 7 of 8 HE Newt

Answer 1

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Answers are highlighted in yellow: Solution: a) FIFO LIFO W. Avg. 2,260 $ 1,280 $ 1,681 Ending Inventory $ Working note: FIFO Goods purchased Cost of Goods Sold Ending Inventory Date Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Jan.20 400 $ 8.00 $ 3,200 400 $ 8.00 $ 3,200 $ Apr.21 2001 $ 10.00 $ 2,000 200 $ 10.00 $ 2,000 $ Jul.25 280 $ 13.00$ 3,640 210 $ 13.00 $ 2,730 70 $ 13.00 $ 910 Sep.19 90 $ 15.00$ 1,350 $ 90 $ 15.00$ 1,350 970 $ 10,190 810 $ 7,930 160 $ 2,260 LIFO Date Jan. 20 Apr.21 Jul.25 Sep.19 Goods purchased Cost of Goods Sold Ending Inventory Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost 400 $ 8.00 $ 3,200 240 $ 8.00 $ 1,920 160 $ 8.00 $ 1,280 2001 $ 10.00 $ 2,000 200 $ 10.00 $ 2,000 $ 280 $ 13.00 $ 3,640 280 $ 13.00 $ 3,640 $ 90 $ 15.00$ 1,350 90 $ 15.00$ 1,350 $ 970 $ 10,190 810 $ 8,910 160 $ 1,280 Avg. Date Jan.20 Apr.21 Jul.25 Sep.19 Goods purchased Cost of Goods Sold Ending Inventory Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost 400 $ 8.00 $ 3,200 $ $ 2001 $ 10.00 $ 2,000 810 $ 10.51 $ 8,509 160 $ 10.51$ 1,681 280 $ 13.00 $ 3,640 $ $ 90 $ 15.00$ 1,350 $ $ 970 $ 10,190 810 $ 8,509 160 $ 1,681

b) Sales (810*20) Cost of goods sold (Refer part a) Gross Margin (Sales - COGS) FIFO LIFO Difference $ 16,200 $ 16,200 $ 7,930 $ 8,910 $ 8,270 $ 7,290$ 980