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JAMB Principles of Accounts 2012 Question 20

Question 20

Stock Valuation

1/5/07 Purchased 100 bags of milk at ₦10.00k each
3/5/07 Purchased 60 bags of milk at ₦11.50k each
8/5/07 Issued 85 bags of milk
15/5/07 Purchased 180 bags of milk at ₦12.80k each
22/5/07 Issued 145 bags of milk.
Using FIFO method, what would be the value of stock as at 9/5/07?

  1. A.₦862.50
  2. B.₦840.00
  3. C.₦806.25
  4. D.₦750.00
Show the answer and explanation

Answer: B (₦840.00)

Explanation

FIFO issues the oldest first, so the 85 bags come from the ₦10 batch. Left: 15 × 10 = 150 plus 60 × 11.50 = 690, total ₦840.