Use the information below to answer questions Jan. 1 Received 1,000 units at N10 each
FINANCIAL
JAMB 2009
Use the information below to answer questions
Jan. 1 Received 1,000 units at N10 each
Jan. 2 Received 2,000 units at N12 each
Jan. 3 Issued 1,500 units
Jan. 4 Received 1,000 units at N11 each
Jan. 5 Issued 1,000 units
What is the value of closing stock using simple average?
- A. N11,500
- B. N17,000
- C. N16,500
- D. N28,500
Correct Answer: C. N16,500
Explanation
In this method of stock valuation, the average unit cost is calculated by multiplying the total of the unit costs by the number of receiving.
| issue price method | Date | Receipt | Issue | Balance | |||||
| Simple average | Qty | price | Value | Dispatch Qty | Balance | ||||
| 1/1 | 1000 | 10 | 10000 | - | 1000 | ||||
| 2/1 | 2000 | 12 | 24000 | - | 3000 | ||||
| 3/1 | - | - | - | 1500 | 1500 | ||||
| 4/1 | 1000 | 11 | 11000 | - | 2500 | ||||
| 5/1 | - | - | - | 1000 | 1500 | ||||
| Total | 4000 | 33 | 2500 | 1500 | |||||
The closing stock using simple average =
(33 ÷ 3) x 1500 = 16500
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