JAMB - Accounts Principles Of Accounts (2009 - No. 19)
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?
N11,500
N17,000
N16,500
N28,500
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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