! 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 20, purchased 330 units @ $12 = $3,960. April 21, purchased 140 units @ $13 = $1,820. July 25, purchased 250 units @ $ 14 = $3500. September 19, purchased 90 units @ $16 = $1,440. During the year, The Shirt Shop sold 630 T-shirts for $21 each.Exercise 5-5 (Algo) Part a 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. Note: Round intermediate calculations to 2 decimal places and final answers to nearest whole dollar amount. Exercise 5-5 (Algo) Part b b. Compute the difference in gross margin between the FIFO and LIFO cost flow assumptions.
! 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 20, purchased 330 units @ $12 = $3,960. April 21, purchased 140 units @ $13 = $1,820. July 25, purchased 250 units @ $ 14 = $3500. September 19, purchased 90 units @ $16 = $1,440. During the year, The Shirt Shop sold 630 T-shirts for $21 each.Exercise 5-5 (Algo) Part a 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. Note: Round intermediate calculations to 2 decimal places and final answers to nearest whole dollar amount. Exercise 5-5 (Algo) Part b b. Compute the difference in gross margin between the FIFO and LIFO cost flow assumptions.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![! 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 20, purchased 330
units @ $12 = $3,960. April 21, purchased 140 units @ $13 = $1,820. July 25, purchased 250 units @ $
14 = $3500. September 19, purchased 90 units @ $16 = $1,440. During the year, The Shirt Shop sold
630 T- shirts for $21 each.Exercise 5-5 (Algo) Part a 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. Note: Round intermediate calculations to 2 decimal places and final
answers to nearest whole dollar amount. Exercise 5-5 (Algo) Part b b. Compute the difference in gross
margin between the FIFO and LIFO cost flow assumptions.
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
Difference](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe70746ec-1888-42de-99e5-bc80107863c8%2F61bf1a0e-f1e3-420b-b4ea-1c6e7023af4b%2F7nkpxd_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 20, purchased 330
units @ $12 = $3,960. April 21, purchased 140 units @ $13 = $1,820. July 25, purchased 250 units @ $
14 = $3500. September 19, purchased 90 units @ $16 = $1,440. During the year, The Shirt Shop sold
630 T- shirts for $21 each.Exercise 5-5 (Algo) Part a 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. Note: Round intermediate calculations to 2 decimal places and final
answers to nearest whole dollar amount. Exercise 5-5 (Algo) Part b b. Compute the difference in gross
margin between the FIFO and LIFO cost flow assumptions.
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
Difference
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