[The following information applies to the questions displayed below.] The Shirt Shop had the following transactions for T-shirts for 2018, its first year of operations: Jan. 20 Purchased 400 units @ $ 8 = $ 3,200 Apr. 21 Purchased 200 units @ $ 10 = 2,000 July 25 Purchased 280 units @ $ 13 = 3,640 Sept. 19 Purchased 90 units @ $ 15 = 1,350 During the year, The Shirt Shop sold 810 T-shirts for $20 each. Requireda. 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. (Round intermediate calculations to 2 decimal places and final answers to nearest whole dollar amount.) b. Compute the difference in gross margin between the FIFO and LIFO cost flow assumptions.
[The following information applies to the questions displayed below.] The Shirt Shop had the following transactions for T-shirts for 2018, its first year of operations: Jan. 20 Purchased 400 units @ $ 8 = $ 3,200 Apr. 21 Purchased 200 units @ $ 10 = 2,000 July 25 Purchased 280 units @ $ 13 = 3,640 Sept. 19 Purchased 90 units @ $ 15 = 1,350 During the year, The Shirt Shop sold 810 T-shirts for $20 each. Requireda. 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. (Round intermediate calculations to 2 decimal places and final answers to nearest whole dollar amount.) 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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[The following information applies to the questions displayed below.]
The Shirt Shop had the following transactions for T-shirts for 2018, its first year of operations:
| Jan. 20 | Purchased | 400 | units | @ | $ | 8 | = | $ | 3,200 | |
| Apr. 21 | Purchased | 200 | units | @ | $ | 10 | = | 2,000 | ||
| July 25 | Purchased | 280 | units | @ | $ | 13 | = | 3,640 | ||
| Sept. 19 | Purchased | 90 | units | @ | $ | 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. (Round intermediate calculations to 2 decimal places and final answers to nearest whole dollar amount.)
b. Compute the difference in gross margin between the FIFO and LIFO cost flow assumptions.
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