The Shirt Shop had the following transactions for T-shirts for Year 1, its first year of operations:- **January 20**: Purchased 410 units @ $12 = $4,920- **April 21**: Purchased 130 units @ $13 = $1,690- **July 25**: Purchased 230 units @ $14 = $3,220- **September 19**: Purchased 80 units @ $15 = $1,200During the year, The Shirt Shop sold 680 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.b. Compute the difference in gross margin between the FIFO and LIFO cost flow assumptions.**Instructions:**Complete this question by entering your answers in the tabs below.**Difference in Gross Margin Calculation Table:**| | FIFO | LIFO | Difference ||---------|------|------|------------|| Gross Margin | | | | ### T-Shirt Shop Inventory and Cost Analysis**Transactions:**The Shirt Shop had the following transactions for T-shirts in Year 1, its first year of operations:- **January 20:** Purchased 410 units at $12 each, totaling $4,920.- **April 21:** Purchased 130 units at $13 each, totaling $1,690.- **July 25:** Purchased 230 units at $14 each, totaling $3,220.- **September 19:** Purchased 80 units at $15 each, totaling $1,200.During the year, 680 T-shirts were sold at $20 each.**Required Calculations:****a.** Compute the ending inventory of T-shirts based on the following cost flow assumptions:1. **FIFO (First-In, First-Out)**2. **LIFO (Last-In, First-Out)**3. **Weighted Average Cost****b.** Calculate the difference in gross margin between the FIFO and LIFO cost flow assumptions.**Instructions for Completion:**- Input answers under the "Required A" and "Required B" tabs.- Note: Round intermediate calculations to two decimal places and final answers to the nearest whole dollar amount.**Table for Recording Results:**| | FIFO | LIFO | Weighted Average ||--------------|------|------|------------------|| Ending Inventory | | | |This analysis aids in understanding how different inventory valuation methods impact financial statements, specifically the ending inventory and gross margin.

The Shirt Shop had the following transactions for T-shirts for Year 1, its first year of operations: January 20 April 21 July 25 410 units 130 units 230 units 80 units September 19 During the year, The Shirt Shop sold 680 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. b. Compute the difference in gross margin between the FIFO and LIFO cost flow assumptions. Purchased Purchased Purchased Purchased @ @ e e $12 $13 = $14 = $15 = $4,920 1,690 3,220 1,200

The Shirt Shop had the following transactions for T-shirts for Year 1, its first year of operations: January 20 April 21 July 25 410 units 130 units 230 units 80 units September 19 During the year, The Shirt Shop sold 680 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. b. Compute the difference in gross margin between the FIFO and LIFO cost flow assumptions. Purchased Purchased Purchased Purchased @ @ e e $12 $13 = $14 = $15 = $4,920 1,690 3,220 1,200

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The beginning inventory of screws on Jan 1 was 1,000 units at $20.00. Inventory on hand was 800 units. Followingtransactions took place during the month are as follows:Jan 10 purchased 500units @ $22.40 eachJan 20 Purchased 600 units@ 23.30 eachThe company uses the periodic inventory method.Required:a. Compute the cost of goods available for sale for the month of January.b. Compute the cost of goods sold and ending inventory for the month of Jan usingAverage cost basis .c. Compute the cost of goods sold and ending inventory for the month of Jan usingFIFO
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Calculate cost of sales for the year: A company uses the periodic method and reported the following amounts for the year. Ending inventory = 40,000 Opening inventory= 41,500 Sales revenue =114,000 Purchases=77000 Purchase discounts = 7000 Purchase returns and allowances = 5800