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JAMB Principles of Accounts 2006 Question 12

Question 12

Stock Valuation

Date | Stock | Qty. (units) | Cost/Price (₦)
July | Bal. b/d | 2 000 | 2.00
Aug. | Purchases | 10 000 | 2.50
Sept. | Purchases | 20 000 | 3.00
Oct. | Sales | 8 000 | 3.50
Nov. | Sales | 23 000 | 4.00
Determine the value of closing stock using the LIFO method.

  1. A.₦2 000
  2. B.₦2 500
  3. C.₦4 000
  4. D.₦3 500.
Show the answer and explanation

Answer: A (₦2 000)

Explanation

32 000 units came in and 31 000 went out, leaving 1 000 units. Under LIFO the latest purchases are sold first, so the 1 000 left are from the opening stock at ₦2.00 = ₦2 000.