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JAMB Principles of Accounts 2009 Question 21

Question 21

Stock Valuation

Jan. 1 Received 1,000 units at ₦10 each
Jan. 2 Received 2,000 units at ₦12 each
Jan. 3 Issued 1,500 units
Jan. 4 Received 1,000 units at ₦11 each
Jan. 5 Issued 1000 units
What is the value of closing stock using simple average?

  1. A.₦11,500
  2. B.₦17,000
  3. C.₦17,500
  4. D.₦28,500
Show the answer and explanation

Answer: B (₦17,000)

Explanation

Jan 3 issue at (10 + 12)/2 = ₦11: 1 500 × 11 = 16 500. Jan 5 issue at (12 + 11)/2 = ₦11.50: 1 000 × 11.5 = 11 500. Goods received cost 45 000, so closing stock = 45 000 − 28 000 = ₦17 000.