Assume you decide to sell printed T-shirts for $12 each. Your research suggests you can buy plain T-shirts for $5 each. Printing would entail a front-end, fixed fee of $120 for the screen and another $0.75 per printed T-shirt. Your initial advertisement yields orders for 100 T-shirts. You then invest $900 in the venture, purchase plain T-shirts and the screen, and get the T-shirts printed (suppliers require you pay for all expenses in cash). By the end of your first week in business, all T-shirts are ready for sale. Customers with orders totaling 50 T-shirts pick up their T-shirts in that first week. But, of the 50 T-shirts picked up, only 25 are paid for in cash. For the other 25, you agree to accept payment next week. Using accrual accounting, what is inventory at the end of the first week?
Assume you decide to sell printed T-shirts for $12 each. Your research suggests you can buy plain T-shirts for $5 each. Printing would entail a front-end, fixed fee of $120 for the screen and another $0.75 per printed T-shirt. Your initial advertisement yields orders for 100 T-shirts. You then invest $900 in the venture, purchase plain T-shirts and the screen, and get the T-shirts printed (suppliers require you pay for all expenses in cash). By the end of your first week in business, all T-shirts are ready for sale. Customers with orders totaling 50 T-shirts pick up their T-shirts in that first week. But, of the 50 T-shirts picked up, only 25 are paid for in cash. For the other 25, you agree to accept payment next week.
Using accrual accounting, what is inventory at the end of the first week?
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