The shirt shop had the following transactions for T-shirts for 2016, it,s first year of operations:
Jan. 20 Purchased 400 units @ $ 8 = $3,200
Apr. 21 purchased 200 units@ $10 = $ 2,000
july 25 purchased 280 units @$ 13 =3,640
sept, 19 purchased 90 units @$15 =1,350
During the year , the shirt shop sold 810 T-shirts for $30 each.
a. Compute the amount of ending inventory the shirt shop would report on the balance sheet, assuming the following cost flow assumption (1) FIFO (2) LIFO (3) weighted average
b. Record the above transactions in general journal form and post to T- account assuming the FIFO, LIFO, weighted average methods. Use a separate set of journal entries and T-accounts for each method . Assume all transactions are cash transactions
c. Compute the difference in gross margin between the FIFO AND LIFO cost flow assumption