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In: Accounting

The Shirt Shop had the following transactions for T-shirts for Year 1, its first year of...

The Shirt Shop had the following transactions for T-shirts for Year 1, its first year of operations:

Jan. 20 Purchased 400 units @ $ 8 = $ 3,200
Apr. 21 Purchased 150 units @ $ 10 = 1,500
July 25 Purchased 200 units @ $ 12 = 2,400
Sept. 19 Purchased 100 units @ $ 14 = 1,400

During the year, The Shirt Shop sold 650 T-shirts for $19 each.


Required

  1. 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.
  2. Compute the difference in gross margin between the FIFO and LIFO cost flow assumptions.

Solutions

Expert Solution

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ekkarill92 answered 1 year ago
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