Required information [The following information applies to the questions display

Question

Required information [The following information applies to the questions displayed below.j The Shirt Shop had the following transactions for T-shirts for Year 1, its first year of operations: Jan. 20 Purchased 500 units es7-$3,500 Apr. 21 Prchased 300 units $92,700 July 25 Purchased 380 units 12 4,560 Sept. 19 Purchased 190 units 14 2,660 During the year, The Shirt Shop sold 1,110 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.) Ending Inventory FIFO LIFO Weighted average

Explanation / Answer

1) FIFO

Under the FIFO method, the ending inventory shall comprises of the inventory purchased recently

Total units purchased = 500 + 300 + 380 + 190 = 1,370 units

Total units sold = 1,110 units

Ending inventory units = 1,370 units – 1,110, units = 260 units

Amount of ending inventory = (190 units * $14) + (70 units * $12) = $3,500

2) LIFO

Under the LIFO method, the ending inventory will comprise of the inventory purchased earlier

Amount of ending inventory = 260 units * $7 = $1,820

3) Weighted average

Weighted average price per unit = {($7*500) + ($9*300) + ($12*380) + ($14*190)} / 1,370 units = $9.80 per unit

Amount of ending inventory = 260 units * $9.80 = $2,548

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