JAMB Principles of Accounts 1994 Question 27

Question 27

Stock Valuation

Use the information below: (Units; Unit cost ₦; Total cost ₦; Units sold)
Beginning inventory: 20; 6; 120
Sale No. 1: units sold 18
Purchase No. 1: 30; 8; 240
Sale No. 2: units sold 20
Purchase No. 2: 10; 9; 90
Totals: 60 units; 38 units sold
Using the FIFO method of stock valuation, the ending inventory cost is

A.₦146
B.₦165
C.₦186
D.₦314

Show the answer and explanation

Answer: C (₦186)

Explanation

Units left = 60 − 38 = 22. Under FIFO the latest units remain: 10 × ₦9 = 90 plus 12 × ₦8 = 96, total ₦186.