Question
Marston Cycles sells one model of bicycle and uses a periodic inventory system. Its records for 2026 show:
| Units | Cost per unit | Total cost |
|---|
| Opening inventory, January 1 | 200 | $50 | $10,000 |
| Purchase, March 14 | 300 | $55 | $16,500 |
| Purchase, August 22 | 500 | $60 | $30,000 |
| Available for sale | 1,000 | | $56,500 |
Marston sold 700 bicycles during the year. The year-end count confirms 300 on hand.
Required:
- FIFO Closing Inventory — closing inventory under first-in, first-out.
- FIFO Cost of Goods Sold — cost of goods sold under FIFO.
- Weighted-Average COGS — cost of goods sold under the (periodic) weighted-average cost formula.
Statements in this challenge
- FIFO Closing InventoryNumeric Answer
- FIFO Cost of Goods SoldNumeric Answer
- Weighted-Average COGSNumeric Answer
Scoring
- 40% Account naming / line matching
- 40% Amount correctness
- 20% Structure / section placement
IAS 2 — Inventories
Cost includes purchase price, import duties, transport and handling, less trade discounts and rebates. The cost formula — FIFO or weighted average — is then applied consistently to inventories of a similar nature and use.
Common mistakes
- Recomputing the weighted average only at the period end when a moving average is required under a perpetual system.
- Including selling costs or storage of finished goods in inventory cost.
- Switching cost formula between periods without treating it as a change of accounting policy.
IFRS vs US GAAP: US GAAP permits LIFO; IAS 2 prohibits it.
Further readingIAS 2: costing methods and NRV