JAMB Principles of Accounts 2002 Question 41

Question 41

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 value of closing stock as at February 14th by simple average method is

A.₦3900
B.₦2500
C.₦4100
D.₦2700.

Show the answer and explanation

Answer: B (₦2500)

Explanation

Up to February 14 only the January purchase (₦25) exists, so every issue is at ₦25. Units left = 500 − 400 = 100, worth ₦2 500.