The Shirt Shop had the following transactions for T-shirts for 2018, its first year of operations:

During the year, The Shirt Shop sold 800 T-shirts for $25 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, rounded to two decimal places.
b. Compute the difference in gross margin between the FIFO and LIFO cost-flow assumptions.

Transcribed Image Text:

Purchased 300 units @ $7 Purchased 400 units @ $12 Purchased 220 units @ $14 Purchased 60 units @ $18 Jan. 18 $2,100 4,800 3,080 1,080 Apr. 15 July 21 Sept. 5