Question

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 25Purchased 280 units e 13 3,640 Sept. 19 Purchased 90 units 151,350 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.) FIFO LIFO Weighted Average Ending inventory $ 2,260 $1,280

Answer 1

Units Unit cost Total

20-Jan 400 8 3200

21-Apr 200 10 2000

25-Jul 280 13 3640

19-Sep 90 15 1350

Total 970 10190

Average cost = 10190/970= $10.51 

Sales = 810*20= $16200  

Ending inventory units = 970-810 = 160 

a   

Ending inventory:   

FIFO 2260 =(90*15)+(70*13) 

LIFO 1280 =160*8 

Weighted average 1682 =160*10.51

   

b   

Cost of goods sold:   

FIFO 7930 =10190-2260 

LIFO 8910 =10190-1280 

Gross margin = Sales-Cost of goods sold 

Gross margin:   

FIFO 8270 =16200-7930 

LIFO 7290 =16200-8910 

Difference 980 =8270-7290

Ending inventory:   

FIFO 2260 

LIFO 1280 

Weighted average 1682