JAMB Principles of Accounts 2002 Question 40

Question 40

Stock Valuation

Use the information below to answer questions 40 and 41.
Purchases (Date; Qty. (units); Rate ₦; Total ₦):
January 2nd; 500; 25; 12500
March 7th; 250; 28; 7000
Issues were made as follows (Date; Qty. (units)):
January 9th; 200
February 14th; 200
March 11th; 200
The closing stock on March 11th by LIFO valuation is

A.₦4200
B.₦2700
C.₦4500
D.₦3900.

Show the answer and explanation

Answer: D (₦3900.)

Explanation

After Jan 9 and Feb 14, 100 units at ₦25 remain. Add 250 at ₦28. LIFO issues 200 at ₦28 on Mar 11, leaving 100 × 25 + 50 × 28 = ₦3 900.