Question $3(41$ marks$)$

Paper Sweets Supplies Limited is located in Kingston. On the last balance sheet date, inventory

amounted to $$12,500,000.$ The entity conducted a stock count with the aim of valuing inventory

for financial statements purposes. The count along with the relevant invoices indicated that there

were $2,500$ dairy$-$nut chocolate bars as at December $31,2022$ the last balance sheet date. Further

investigations revealed that, this amount resulted from two different invoices. The following

information relates to the $2,500$ chocolate bars:

Invoice Date Invoice Number Quantity Total cost

March $2,2022$ XY $15244,000$ $$800,000$

July $22,2022$ XY $20052,500$ $$550,000$

The inventory controller states that $60\%$ of the inventory as at December $31,2022$ relates to March

$2,2022$ invoice, while, the remainder can be attributed to July $22,2022.$ However, the financial

controller wants to ascertain the inventory balance as at December $31,2023$ for financial reporting

purposes. The controller also understands that although the last$-$in$-$first out $($LIFO$)$ method is not

allowed by the international financial reporting standards $($IFRSs$),$ it is acceptable by the US

GAAP. Hence, although the company$$s policy is the average cost method, management wants to

know the impact it has when used.

Below are data relating to the receipt and issue of dairy$-$nut$-$chocolate bars during the period

ended December $31,2023$:

Required:

$($a$)$ Calculate the inventory value and profit for the period ended December $31,2023$ using

the company$$s current inventory valuation policy. $(14\mathrm{.}5$ marks$)$

$($b$)$ Calculate the inventory balance and profit for the period ended December $31,2023$ using

the method acceptable by IFRS. $(14$ marks$)$

$($c$)$ Calculate the inventory value and profit for the period ended December $31,2023$ using

the method acceptable by the US GAAP. $(12\mathrm{.}5$ marks$)$