Exercise 5-5 (Algo) Effect of inventory cost flow on ending inventory balance and gross margin LO 5-1 [The following information applies to the questions displayed below.] The Shirt Shop had the following transactions for T-shirts for Year 1, its first year of operations: January 20 April 21 July 25 September 19 Purchased 370 units @ $12 = Purchased 140 units @ $13 = Purchased 220 units @ $15 = Purchased 100 units @ $16 = During the year, The Shirt Shop sold 690 T-shirts for $21 each. Exercise 5-5 (Algo) Part b b. Compute the difference in gross margin between the FIFO and LIFO cost flow assumptions. Gross margin FIFO LIFO $ 4,440 1,820 3,300 1,600 Difference
Exercise 5-5 (Algo) Effect of inventory cost flow on ending inventory balance and gross margin LO 5-1 [The following information applies to the questions displayed below.] The Shirt Shop had the following transactions for T-shirts for Year 1, its first year of operations: January 20 April 21 July 25 September 19 Purchased 370 units @ $12 = Purchased 140 units @ $13 = Purchased 220 units @ $15 = Purchased 100 units @ $16 = During the year, The Shirt Shop sold 690 T-shirts for $21 each. Exercise 5-5 (Algo) Part b b. Compute the difference in gross margin between the FIFO and LIFO cost flow assumptions. Gross margin FIFO LIFO $ 4,440 1,820 3,300 1,600 Difference
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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![Exercise 5-5 (Algo) Effect of inventory cost flow on ending inventory balance and gross margin LO 5-1
[The following information applies to the questions displayed below.]
The Shirt Shop had the following transactions for T-shirts for Year 1, its first year of operations:
January 20
April 21
July 25
September 19
Purchased 370 units @ $12 =
Purchased 140 units @ $13 =
Purchased 220 units @ $15 =
Purchased 100 units @ $16 =
During the year, The Shirt Shop sold 690 T-shirts for $21 each.
Exercise 5-5 (Algo) Part b
b. Compute the difference in gross margin between the FIFO and LIFO cost flow assumptions.
Gross margin
FIFO
LIFO
$4,440
1,820
3,300
1,600
Difference](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6f886c6c-22bd-4bdf-a596-ee19328c6614%2F9bf8821e-0026-4663-b8f9-e274d1954919%2F07rldri_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Exercise 5-5 (Algo) Effect of inventory cost flow on ending inventory balance and gross margin LO 5-1
[The following information applies to the questions displayed below.]
The Shirt Shop had the following transactions for T-shirts for Year 1, its first year of operations:
January 20
April 21
July 25
September 19
Purchased 370 units @ $12 =
Purchased 140 units @ $13 =
Purchased 220 units @ $15 =
Purchased 100 units @ $16 =
During the year, The Shirt Shop sold 690 T-shirts for $21 each.
Exercise 5-5 (Algo) Part b
b. Compute the difference in gross margin between the FIFO and LIFO cost flow assumptions.
Gross margin
FIFO
LIFO
$4,440
1,820
3,300
1,600
Difference
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