Question

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

Jan. 20	Purchased	470	units	@	$	7	=	$	3,290
Apr. 21	Purchased	270	units	@	$	9	=		2,430
July 25	Purchased	350	units	@	$	12	=		4,200
Sept. 19	Purchased	160	units	@	$	14	=		2,240

During the year, The Shirt Shop sold 1,020 T-shirts for $23 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 cost per unit to 2 decimal places and final answers to the nearest whole dollar amount.)
  

Answer 1

• Requirement asked: ENDING INVENTORY

	Ending Inventory
FIFO	$                   3,080
LIFO	$                   1,610
Weighted Average	$                   2,238

• Workings

FIFO	Cost of Goods available for sale			Cost of Goods Sold			Ending Inventory
	Units	Cost/unit	COG for sale	Units sold	Cost/unit	COGS	Units	Cost/unit	Ending inventory
20-Jan	470	$                   7.00	$                        3,290.00	470	$                 7.00	$                 3,290.00	0	$                   7.00	$                         -
21-Apr	270	$                   9.00	$                        2,430.00	270	$                 9.00	$                 2,430.00	0	$                   9.00	$                         -
25-Jul	350	$                12.00	$                        4,200.00	280	$               12.00	$                 3,360.00	70	$                 12.00	$                840.00
19-Sep	160	$                14.00	$                        2,240.00	0	$               14.00	$                              -	160	$                 14.00	$            2,240.00
TOTAL	1250		$                      12,160.00	1020		$                 9,080.00	230		$            3,080.00
LIFO	Cost of Goods available for sale			Cost of Goods Sold			Ending Inventory
	Units	Cost/unit	COG for sale	Units sold	Cost/unit	COGS	Units	Cost/unit	Ending inventory
20-Jan	470	$                   7.00	$                        3,290.00	240	$                 7.00	$                 1,680.00	230	$                   7.00	$            1,610.00
21-Apr	270	$                   9.00	$                        2,430.00	270	$                 9.00	$                 2,430.00	0	$                   9.00	$                         -
25-Jul	350	$                12.00	$                        4,200.00	350	$               12.00	$                 4,200.00	0	$                 12.00	$                         -
19-Sep	160	$                14.00	$                        2,240.00	160	$               14.00	$                 2,240.00	0	$                 14.00	$                         -
TOTAL	1250		$                      12,160.00	1020		$               10,550.00	230		$            1,610.00

Average Method	Cost of Goods available for sale			Cost of Goods Sold			Ending Inventory
	Units	Cost/unit	COG for sale	Units sold	Cost/unit	COGS	Units	Cost/unit	Ending inventory
20-Jan	470	$                   7.00	$                        3,290.00
21-Apr	270	$                   9.00	$                        2,430.00
25-Jul	350	$                12.00	$                        4,200.00
19-Sep	160	$                14.00	$                        2,240.00
TOTAL	1250	$              9.7280	$                      12,160.00	1020	$             9.7300	$                 9,924.60	230	$              9.7300	$            2,237.90