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JAMB Principles of Accounts 1994 Question 18

Question 18

Stock Valuation

Stock: Cost price (₦), Qty (units)
Opening balance 1/1/90: ₦3.00, 3 000
Purchases January: ₦3.50, 15 000
Purchases February: ₦4.00, 25 000
Sales January: ₦4.50, 13 000
Sales February: ₦5.00, 28 000
Using LIFO, determine the value of closing stock.

  1. A.₦9 600
  2. B.₦7 600
  3. C.₦6 000
  4. D.₦2 000
Show the answer and explanation

Answer: C (₦6 000)

Explanation

Units left = 3 000 + 15 000 + 25 000 − 13 000 − 28 000 = 2 000. Under LIFO the latest purchases are sold first, so the 2 000 left are from the opening stock at ₦3.00: 2 000 × 3 = ₦6 000.