Inventory Valuation
Inventory Valuation
Inventory Valuation
PROBLEM # 01:
In pricing the gallons of petrol sold, service station Y follows the FIFO while service station Z
follows the LIFO method. On May 1, both had the same quantity in stock that is 6,000 gallons @ Rs. 26
per gallon. During the month each station received additional supplies of 6,000 gallons @ Rs. 28.50 per
gallon. Sales for each of these two stations during the month were 8,800 gallons at the rate of Rs. 29.50
per gallon.
Required:
Determine for each service station the profit earned during the month and the value of petrol in
stock at the close of the month. .
PROBLEM # 02:
Records of ABC Company shows the following data relative to commodity A:
2008 January 1 Opening inventory 1,000 Units @ 5.00
February 5 Purchases 2,000 Units @ 5.50
March 12 Purchases 3,000 Units @ 5.40
March 14 Sales 3,500 Units @ 10.00
April 12 Purchases 5,000 Units @ 6.00
May 14 Purchases 1,000 Units @ 7.00
June 30 Sales 4,000 Units @ 10.00
Required:
1. Compute the cost of ending inventory on June 30, under each of the following methods:
a. First-in-first-out (perpetual)
b. Last-in-first-out (periodic)
c. Moving average method
2. Prepare comparative income statement showing effect of three alternative valuations methods
on Gross Profit.
PROBLEM # 3:
The inventory record of Deluxe Trading Company for the month of November is as under:
Units Rate (Rs.)