Alex Ltd uses the first-in, first-out (FIFO) method to value its stocks of finished goods.
As at 1 January there were stocks of 25 units that had cost £54 each.
During January, the following transactions occurred:
8 January – 10 units were sold for £62 each
15 January – 10 units were purchased for £55 each
22 January – 10 units were sold for £62 each
What was the value of Alex Ltd’s closing stock as at 13 January?
Select ONE answer:
- £815
- £810
- £825
- £820
Show your workings to arrive at your answer, and explain and justify your reasons:
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
This multiple-choice question is suitable for Accounting KS5 classes.
The answer is 4
- Not correct
- Not correct
- Not correct
- Correct – There are only (25 – 10 + 10 – 10) = 15 units in stock at the end of January. 10 of these are valued at £55, and the remainder at £54: (10 × £55) + ( 5 × £54) = £820
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