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JAMB Principles of Accounts 1994 Question 28

Question 28

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 LIFO inventory procedures, the ending inventory cost is

  1. A.₦136
  2. B.₦176
  3. C.₦196
  4. D.₦264
Show the answer and explanation

Answer: A (₦136)

Explanation

Units left = 22. Under (periodic) LIFO the latest units are treated as sold, so the remaining stock is the earliest: 20 × ₦6 = 120 plus 2 × ₦8 = 16, total ₦136.