Englehart Ltd. sells two types of pumps. One is large and is for commercial use. The other is smaller and is used in residential swimming pools. The following inventory data is available for the month of March.

Accounting
a. Assuming Englehart uses a periodic inventory system, determine the cost of inventory on hand at March 31 and the cost of goods sold for March under first-in, first-out (FIFO).
b. Assume Englehart uses average-cost. Determine the cost of inventory on hand at March 31 and the cost of goods sold for March.
Analysis
a. Assume you need to compute a current ratio for Englehart. Which inventory method (FIFO or average-cost) do you think would give you a more meaningful current ratio?
b. Some of Englehart's competitors use average-cost inventory costing and some use FIFO. How can an analyst compare the results of companies in an industry when some use average-cost and others use FIFO?
Principles
*a. Can companies change from one inventory accounting method to another? If a company changes to an inventory accounting method used by most of its competitors, what are the trade-offs in terms of the Conceptual Framework discussed in Chapter 2 of the textbook?
*b. If a U.S. company decides to adopt IFRS, what inventory accounting methods could it choose from?

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Units Price per Unit Total Residential Pumps £ 400 £ 80,000 Inventory at Feb. 28 200 Purchases: £ 450 500 March 10 £225,000 £ 475 March 20 400 £190,000 £ 500 March 30 300 £150,000 Sales: £ 540 500 March 15 £270,000 £ 570 March 25 400 £228,000 Inventory at Mar. 31 500 Commercial Pumps £ 800 Inventory at Feb. 28 600 £480,000 Purchases: £ 900 600 March 3 £540,000 £ 950 March 12 300 £285,000 March 21 500 £1,000 £500,000 Sales: £1,080 March 18 900 £972,000 £1,140 March 29 600 £684,000 Inventory at Mar. 31 500