UNIVERSITY COLLEGE OF THE CARIBBEAN ASSOCIATE OF SCIENCE DEGREE IN BUSINESS ADMINISTRATION INTRODUCTION TO COST AND MANAGEMENT ACCOUNTING STOCK

VALUATION WORKSHEET

1. In times of inflation which stock valuation method will give the higher value of stock FIFO or LIFO? Why? b) Atlas Ltd is having difficulty costing material X to the various jobs that it is used on. The material is bought in bulk and recent receipts and issues have been as follows: 1/6/X2 3/6/X2 6/6/X2 9/6/X2 12/6/X2 14/6/X2 Cost the issues of following bases i) ii) iii) 2. Balance b/f 1,000 kilos @ $4.00 per kilo Receipts 2,100 kilos @ $5.00 per kilo Receipts 1,500 kilos @ $5.50 per kilo Issues 2,500 kilos Receipts 3,000 kilos @ $6.00 per kilo Issues 3,500 kilos material X for June and calculate the value of closing stock on the a)

FIFO LIFO Weighted Average

Marigold Company uses the continuous inventory method and has the following inventory information available for the month of April from the stock account. Opening Stock April 2 April 4 April 8 April 12 April 15 April 19 April 22 April 24 April 28 100 units @ $10.00 each Purchased 200 units @ $10.30 each Sold 250 units @ $12.00 each Purchased 200 units @ $10.40 each Sold 210 units @ $13.00 each Purchased 250 units @ $10.60 each Sold 150 units @ $13.50 each Purchased 100 units @ $10.80 each Sold 200 units @ $14.00 each Purchased 100 units @ $11.40 each

Calculate the value of the closing inventory using the following inventory valuation methods: a) FIFO b) LIFO

c) AVCO 3) The following relates to the flow of goods in a manufacturing businessMMDT Company for the month of February 2007: February 1 4 5 8 10 11 15 22 27 Balance 1 000 units @ $5.00 each. Purchase 1 500 units @5.25 each Sales 1 300 units Purchases 2 000 units @ $5.25 each Sales 3 000 units Purchases 4 000 units @ $5.15 each Sales 3000 units Purchases 1 500 units @ $5.25 each Purchases 1 000 units @ $5.25 each

Calculate the ending inventory, in units and dollar, using (a) LIFO, (b) FIFO (c) AVCO Assume all costs are known at the time of purchase and sale. (d) State 3 advantages each of LIFO, FIFO and AVCO methods of stock valuation. (e) State 2 disadvantages each of LIFO,FIFO and AVCO methods of stock valuation. 4) Transactions were as follows: Quantity/units Opening balance, May 1, 19xx Receipts, July 3, 19xx Issues, July 4, 19xx Receipts, May 9, 19xx Issues, May 11, 19xx Receipts, May 18, 19xx Issues, May 20, 19xx REQUIRED: (a) (i) Show the value of the issues using FIFO. (ii) Show the value of closing stocks using FIFO. (b) (i) Show the values of the issues using LIFO. (ii) Show the value of closing stock using LIFO. 200 800 400 600 800 200 100 Unit Cost ($) 200 210 212 240 Total Cost ($) 40000 168000 127200 48000

(iii) Outline two advantages and two disadvantages of the LIFO method of stock valuation. 5) The following information is available about a component Opening stock Receipts 1st Jan 6th Jan 20th Jan 2nd Jan 16th Jan 500 at $2 each 160 at $2.20 each 180 at $2.25 each 300 210

Issues REQUIRED:

(c) (i) Show the value of the issues using FIFO. (5marks) (ii) Show the value of closing stocks using FIFO. (5marks) (d) (i) Show the values of the issues using LIFO. (5marks) (ii) Show the value of closing stock using LIFO. (5marks) (iii) Outline two advantages and two disadvantages of the LIFO method of stock valuation. (5marks) 6) A) See Less Inc. are retailers, trading mainly in hand blown glass vases. A statement of their purchases and sales of these vases for the month of June 20X5 is given as follows: June 1 June 3 June 5 June 6 June 10 June 14 June 18 June 23 June 27 Opening stock of 30 vases valued at a total cost of $27,000. Purchased 45 vases at a cost of $980 each. Sold 55 vases at $1,600 each. Purchased 70 vases at $1,200 Sold 60 vases for $114,000. Purchased 80 vases at $1,100. Sold 65 vases for $2,300 each. Purchased 75 vases at a total cost of $108,750. Sold 112 vases for $280,000.

Calculate the value of the ending inventory for See Less Inc. using the following inventory valuation methods: (a) LIFO (b) FIFO (c) ACO

B) Prepare the Trading account for the month ended June 30, 20X5 to determine the gross profit earned by See Less Inc. for that period. (7) A. The price of a key component used in the manufacture of XYZ Co Ltd products has fluctuated over two periods in 2010 and the Accountant is unsure what price to cost issues to job # 10. You have just completed your degree with UCC and are aware of the use of the ledger card and have advised the accountant to use this to solve his problem and to also determine the value of the ending inventory. He has presented you with the following information and has requested to use the First in First out (FIFO) valuation method to complete the stores ledger card : Jan. 1 opening stock 20 units @$80 per unit; Jan. 10 purchased 20 units @ $81 per unit; Jan. 17 purchased 60 units @ $70 per unit; Jan. 30 purchased 30 units totalling $2,460; Jan. 31 sold 50 units @ $100 per unit; Feb. 7 purchased 50 units totalling $4,250; Feb. 17 purchased 30 units totalling $2,550; Feb. 20 purchased 20 units @ $94 per unit; Feb. 28 sold 100 units for a total of $12,000; Mar. 10 purchased 60 units @ $90 per unit; Mar. 31 purchased 40 units @ $97 per unit; Jan 31 sold 150 units for a total of $19,500 B. Prepare the company trading account for the period ending March 2010 C. Define the term inventory and state three (3) types of inventories that can be found in a manufacturing company and define each (8 Marks)