Required information 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: 4 January 201 April 21 July 25 September 19 Purchased 400 units @ $4- Purchased 90 units @ $5- Purchased 250 units @ $7- Purchased 60 units @ $9- During the year, The Shirt Shop sold 650 T-shirts for $14 each. Exercise 5-5 (Algo) Part b b. Compute the difference in gross margin between the FIFO and LIFO cost flow assumptions. Gross margin S FIFO 4.340 $ 1,600 450 1,750 540 LIFO Difference
Required information 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: 4 January 201 April 21 July 25 September 19 Purchased 400 units @ $4- Purchased 90 units @ $5- Purchased 250 units @ $7- Purchased 60 units @ $9- During the year, The Shirt Shop sold 650 T-shirts for $14 each. Exercise 5-5 (Algo) Part b b. Compute the difference in gross margin between the FIFO and LIFO cost flow assumptions. Gross margin S FIFO 4.340 $ 1,600 450 1,750 540 LIFO Difference
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
B18.
![Required information
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 201
April 21
July 25
September 19
Purchased 400 units @ $4-
Purchased 90 units @ $5=
Purchased 250 units @ $7-
Purchased 60 units @ $9-
During the year, The Shirt Shop sold 650 T-shirts for $14 each.
Exercise 5-5 (Algo) Part b
b. Compute the difference in gross margin between the FIFO and LIFO cost flow assumptions.
Gross margin
S
FIFO
4.340
$1,600
450
1,750
540
LIFO
Difference](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1e287942-61de-49c9-885d-0454a29e1eb6%2F4323f6cc-1b81-4861-aaa2-ecbf5504fd60%2F0dkg3f_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information
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 201
April 21
July 25
September 19
Purchased 400 units @ $4-
Purchased 90 units @ $5=
Purchased 250 units @ $7-
Purchased 60 units @ $9-
During the year, The Shirt Shop sold 650 T-shirts for $14 each.
Exercise 5-5 (Algo) Part b
b. Compute the difference in gross margin between the FIFO and LIFO cost flow assumptions.
Gross margin
S
FIFO
4.340
$1,600
450
1,750
540
LIFO
Difference
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