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JAMB Principles of Accounts 2012 Question 21

Question 21

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 simple average method, calculate the value of stock after 22/5/07.

  1. A.₦1,198.00
  2. B.₦1,218.38
  3. C.₦1,257.67
  4. D.₦1,408.00
Show the answer and explanation

Answer: C (₦1,257.67)

Explanation

Bags left = 340 − 230 = 110. Simple average price = (10.00 + 11.50 + 12.80) ÷ 3 = ₦11.433, so stock = 110 × 11.433 = ₦1 257.67.