The Shirt Shop had the following transactions for T-shirts for2018, its first year of...

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Accounting

The Shirt Shop had the following transactions for T-shirts for2018, its first year of operations:
Jan. 20 Purchased 420 units @ $ 9 = $ 3,780
Apr. 21 Purchased 150 units @ $ 10 = 1,500
July 25 Purchased 230 units @ $ 12 = 2,760
Sept. 19 Purchased 80 units @ $ 13 = 1,040
During the year, The Shirt Shop sold 730 T-shirts for $18 each.Compute the difference in GROSS MARGIN between the FIFO and LIFOcost flow assumptions

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3.7 Ratings (651 Votes)

Sales revenue	=	730 T shirts X $18
		$ 13,140
As per FIFO					Cost of Goods sold
Jan-20	Purchased	420	$ 9	$ 3,780	420	$ 9	$ 3,780
Apr-21	Purchased	150	$ 10	$ 1,500	150	$ 10	$ 1,500
Jul-25	Purchased	230	$ 12	$ 2,760	160	$ 12	$ 1,920
Sep-16	Purchased	80	$ 13	$ 1,040	0	$ 13	$ -
	Total			$ 9,080	730		$ 7,200

Gross Margin	=	Sales revenue - cost of goods sold
	=	$13,140 - $7,200
	=	$ 5,940

As per LIFO					Cost of Goods sold
Jan-20	Purchased	420	$ 9	$ 3,780	270	$ 9	$ 2,430
Apr-21	Purchased	150	$ 10	$ 1,500	150	$ 10	$ 1,500
Jul-25	Purchased	230	$ 12	$ 2,760	230	$ 12	$ 2,760
Sep-16	Purchased	80	$ 13	$ 1,040	80	$ 13	$ 1,040
	Total			$ 9,080	730		$ 7,730

Gross Margin	=	Sales revenue - cost of goods sold
	=	$13,140 - $7,730
	=	$ 5,410


Difference in Gross margin	=	Gross margin as per FIFO - Gross margin as per LIFO
	=	$5,940 - $5,410
	=	$ 530

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In: AccountingThe Shirt Shop had the following transactions for T-shirts for2018, its first year of operations:...The Shirt Shop had the following transactions for T-shirts for2018, its first year of operations:Jan. 20 Purchased 420 units @ $ 9 = $ 3,780Apr. 21 Purchased 150 units @ $ 10 = 1,500July 25 Purchased 230 units @ $ 12 = 2,760Sept. 19 Purchased 80 units @ $ 13 = 1,040During the year, The Shirt Shop sold 730 T-shirts for $18 each.Compute the difference in GROSS MARGIN between the FIFO and LIFOcost flow assumptions