I think much of the confusion is around "my daddy" vs "the daddy". I don't agree with the folks that are saying "the shirt is the daddy's" is an awkward sentence. It's only awkward if you are referring to YOUR father. That isn't clear from the sentence. And if you were telling a child the story of Goldielocks and The Three Bears, you would say "then Goldielocks tasted the daddy's porridge and it was too hot".
So if someone could defend Duo marking my answer wrong ("the shirt is the daddy's"), I would love to hear it. Thanks!