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REVIEW QUESTIONS.
INVENTORY VALUATION
QN ONE
Maro Mills ltd take a periodic inventory system of his stock on chemical Y at the end of each
month.
The physical inventory token on June 30 show a balance of 1000 litres of chemical Y in hand @
2.28/= per litre.
The following purchases were made during July
July 01 14,000 litres @ 2.30/=
08 10,000 litres @ 2.32/=
09 20,000 litres @ 2.33/=
25 500 litres @ 2.35/=
A physical inventory on July 31 discloses that there is a stock of 10,000 litres
You are required to compute the inventory value on July 31 by each of the following methods
1. FIFO
2. LIFO
3. AVCO
QN TWO.
The following are the details regarding the receipts and issues of material X in respect of the firm
Receipts Jan 01 balance 50 units @ 4/= per unit
05 40 units @ 3/=
08 30 units @ 4/=
15 20 units @ 5/=
26 40 units @ 3/=
Issues
Jan 10 70 units
12 10 units
20 20 units
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24 10 units
31 5 units shortage
The firm follow inventory perpetual system for maintaining its stock ledger.
You are required to calculate the value of inventory on Jan 31 according to
a. FIFO
b. LIFO
c. AVCO
d. HIFO
QN THREE
Purchases of a certain product during march 1992 are set out below
March 01 100 units @ 10/=
12 100 units @ 9.8/=
15 50 units @ 9.6/=
20 100 units @ 9.4/=
Units sold during the month were as follows
March 10 80 units
14 100 units
30 90 units
No opening stock
You are required to determine the cost of goods sold for the march under
1. FIFO
2. LIFO
3. AVCO
QN FOUR
From the following data, calculate the value of inventory on 31 Jan 1998 by
1. FIFO
2. FIFO
1998
1 Jan opening stock 200 pieces @ 2/=
4 Jan purchases 100 pieces @ 2.20/=
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10 Jan purchases 150 pieces @ 2.40/=

20 Jan purchases 180 pieces @ 2.50/=
2 Jan issues 150 pieces
7 Jan issues 100 pieces
12 Jan issues 200 pieces

QN FIVE
Calculate the value of inventory using
a. Weighted average cost
b. The LIFO method
April
1 balance b/f 300 units @ 600/=
2 purchased 200 units @ 440/=
4 issued 150 units
6 purchased 200 units @ 460
11 issued 150 units
19 issued 200 units
22 purchased 200 units @ 480/=
25 issued 250 units
QN SIX
A company started on 1 Jan 1995 purchased Raw materials. During 1995 as started as follows
Jan 2 800 kg 62/= per kg
Feb 13 1200 kg 57/= per kg
April 26 2500 kg 59/= per kg
July 10 3000 kg 56/= per kg
Sept 18 1500 kg 60/= per kg
Nov 29 1000 kg 65/= per kg
While preparing its financial statement at 31 December 1995 the company had 1300 kgs of Raw
materials in its godown
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Calculate the value of closing stock of Raw materials according to

1. FIFO
2. LIFO
3. AVCO
QN SEVEN
From the following data calculate the value of closing stock according to
LIFO in march 31
1. Periodic inventory system
2. Perpetual inventory system
March 1 stock in hand 400 units @ 7.5/=
Purchases
March 5 600 units @ 8.00/=
15 500 units @ 9.00/=
25 400 units @ 8.5/=
30 300 units @ 9.5/=
Issues
March 03 300 units
10 500 units
17 400 units
26 500 units
31 200 units
QN EIGHT
Oil company is a bulk distributor of high-octane petrol. A periodic inventory of petrol on hand is
taken when the books are closed at the end of each month.
The following summary of information is available for the month of June 1997
Sales 945,000
General administration cost 25,000
Opening stock 100,000 litres @ 3/= 300,000
Purchases
June 01 200,000 litres @ 2.85/=
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June 30 100,000 litres @ 3.03/=

Closing stock June 30 130,000 litres
Compute the following by
1. FIFO
2. AVCO
3. LIFO
a. Value of inventory
b. Amount of cost of goods sold
c. Profit or loss
QN NINE
The Kilimanjaro comparative society’s stock of its production on 1 April 2000 was 92,000 litres
valued at 30/= per litre. the following information shows additional purchases of this product
during the year.
April 7 purchase 176,000 litres @ 32/=
Oct 8 purchase 190,000 litres @ 34/=
Jan 2 purchase 124,000 litres @ 36/=
On 31 march 2001 a physical stock taking indicated that 140,000 litres remained in closing
stock.
Note
All issues are priced at the end of the year
Required
Determine the closing stock valuation and the cost of goods sold for the year ended 31 march
2001 under each of the following methods
a. Weighted average cost
b. Last in, first out
c. First in, first out
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QN TEN

A business is commenced on 1 January and purchases are made as follows:

Unit price
Month No of units Value TAS.
TAS.
Jan 380 2.00 760
Feb 400 2.50 1,000
Mar 350 2.50 875
Apr 420 2.75 1,155
May 430 3.00 1,290
Jun 440 3.25 1,430
2,420 6,510

During this period, 1,420 articles were sold for TAS.7,000.

Required:

1. Compute the cost of stock on hand at 30 June using the following methods
(i) FIFO
(ii) LIFO
(iii) Weighted Average Cost
Show the effect of each method on the trading results for the six months

QN ELEVEN
From the following details calculate the value of inventory on January 01 according to the
weighted average price method when the firm follows
1. Periodic inventory system
2. Perpetual inventory system
Jan 01 purchases 100 units @ 4/=
Jan 08 purchases 200 units @ 5/=
Jan 20 sales 100 units
Jan 25 purchases 200 units @ 6/=
Jan 31 sales 200 units
QN TWELVE
Then following are the details regarding inventories of a manufacturing concern as on 31st
December 2018.
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Inventory category Cost Net realizable value / market price

Category 01 A. 6,000 9,000
B 10,000 9,500
Category 02 C. 15,000 17,000
D 20,000 14,000
51,000 49,500

You are required to determine inventory value using

1. Aggregate or total inventory method
2. Group method
3. Item by item method
QN THIRTEEN
The following details relate to the value of inventories of different items as on 31st December
1998, you are required to calculate the value of inventory for balance sheet purposes on the basis
of cost or NRV Whichever is lesser by the following methods
1. Aggregate method
2. Group method
3. Item by item method
Articles Group Number of Cost per item NRV per item
items
A X 5 10 12
B X 4 14 12
C Y 6 10 8
D Y 10 15 20
E Y 5 20 15
F Z 4 15 10
G Z 5 20 16
H P 4 6 4
I P 3 4 5
J P 3 3 2
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QN FOURTEEN
LIMITLESS VISION
Trading account for the year ended 31st December 1995
Net sales 397,000

Less cost of sales

Stock 01/01/1995 122,500
Purchases 315,000
437,500
Less closing stock 31/12/1995 140,000 297,500

Gross profit 99,500

Other data available
a. The figure of sales given does not include sales of 13,000/= made on 31st December 1995
in the afternoon. This was recorded as occurring in the following business day by
mistake.
b. 10,000/= cost of goods sold on 31st 1995 was included in closing stock by error.
c. Records of salvaged stock from the fire revealed that trading transactions from 31st
December 1995 to the day of the fire were as follows
Net sales 181,500/= including 13,000/= sales of 31st December 1995 erroneously
included in sales of January 1996. Net purchases 108,000/=
Required
Prepare a report directed to the national insurance corporation summarizing your findings
and computation of the stock destroyed by fire for which limitless vision need to be
compensated.
QN FIFTEEN
Articles 1, 2 and 3 are televisions; Articles 4, 5 and 6 are DVD recorders;
and Articles 7, 8 and 9 are videos.
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Article Different categories Cost Net realizable value

1 A 100 80
2 A 120 150
3 A 300 400
4 B 180 170
5 B 150 130
6 B 260 210
7 C 410 540
8 C 360 410
9 C 420 310
2,300 2,400

Compute stock by using

1. Item method/ article method
2. Aggregate method
3. Group method/ category method
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