On January 7 The Marques company had 400 units of inventory on hand at a cost of
ID: 2422335 • Letter: O
Question
On January 7 The Marques company had 400 units of inventory on hand at a cost of $12 per unit. The company purshased inventory 4 times during the year. The Following information relates to the inventory purshases:
Assume Marques Company sold 1000 units of inventory during 2007
A) Compute the ending inventory and COGS assuming Marques follows IFRS and chooses to use the Weighted Average method. B) Compute the Ending Inventory and COGS assuming Marques follows US GAAP and chooses to use LIFO. C) What are the differences in Ending Inventory and COGS using the Weighted Average and LIFO.
March 1 Purshased 300 Units @$15 June 1 Purshased 200 Units @ $16 August 1 Purshased 250 Units @$17 October 1 Purshased 300 Units @$18Explanation / Answer
Weighted Average
Date
No of Units
Cost Per Unit
Total Cost
7-Jan
400
12
4,800
1-Mar
300
15
4,500
1-Jun
200
16
3,200
1-Aug
250
17
4,250
1-Oct
300
18
5,400
1,450
22,150
Weighted average unit cost = $22,150 / 1450,units=$15.28 per unit
No of Units available for sale 1,450
Less number of units sold (1,000)
Number of units in inventory (unsold units) 450
Cost of goods sold: 1,000 units × $15.28= $15,280
Cost of ending inventory: 450 units × $15.28 = $6,876
LIFO
Purchase
Cost of Goods Sold
Balance
Date
No of Units
Cost Per Unit
Total Cost
No of Units
Cost Per Unit
Total Cost
No of Units
Cost Per Unit
Total Cost
7-Jan
400
12
4,800
400
12
4,800
1-Mar
300
15
4,500
250
15
3,750
50
15
750
1-Jun
200
16
3,200
200
16
3,200
1-Aug
250
17
4,250
250
17
4,250
1-Oct
300
18
5,400
300
18
5,400
1,450
22,150
1,000
16,600
450
5,550
Date
No of Units
Cost Per Unit
Total Cost
7-Jan
400
12
4,800
1-Mar
300
15
4,500
1-Jun
200
16
3,200
1-Aug
250
17
4,250
1-Oct
300
18
5,400
1,450
22,150
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