MFR Dec 2000 Past Paper
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Referring to task 1.3 b) what is the quickest way to calculate the Closing stocks as at 30 Nov 2000 using the data on the paper?<BR><BR>Included in the stock valuation as at 31 October 2000 (19750.00) were 20 identical clocks each costing £150<BR><BR>Stock movements during the month of Nov 200 were as follows:<BR>Purchases 03/11/00 15 @ £160 each<BR>Sales 12/11/00 10 @ £300 each<BR>Purchases 15/11/00 5 @ £155 each<BR>Sales 25/11/00 15 @ £310 each<BR><BR>Stock is valued on a FIFO basis.<BR><BR>I'm very confused on how to deal with the Opening stock of £19750, how do you know the quantity of stock it contains - ok the 20 identical clocks @ £150 are included in that figure, but you don't know they're oldest stock to sell them on the 12/11/00??<BR><BR>Help!!!! - think I'm getting muddled here<BR><BR><BR>Adrian
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MFR Dec 2000 Past Paper
Hiya<BR><BR>The key to this is that FIFO is used.<BR><BR>If you look at how many have been sold and how many were bought.<BR><BR>IE: 25 were sold over the month<BR>and 20 were bought altho there was already 20 in stock<BR><BR>Therefore, the 25 sold were taken from the First In:-<BR><BR>this would include the 20 @ £150 (already in stock at start of month)<BR>and 5 @ £160 (out of those bought on 3/11/00)<BR><BR>This leaves you with:-<BR><BR>5 @ £155 each (which were the last ones bought on 15/11/00)<BR>and 10 @ £160 (which is the remainder of the first ones bought on 3/11/300 as 5 of these were sold)<BR><BR>Therefore closing stocks on 30 Nov:-<BR><BR>5 @ £155 = £755<BR>10 @ £160 = £1600<BR>TOTAL = £2375<BR><BR>Hope this helps.<BR><BR>Jasper0 -
MFR Dec 2000 Past Paper
The closing stock of £19750 refers to all stocks held (watches, clocks, all sorts) and I think we are now only examining a particular group in it, which is these 20 identical clocks and stock movements in this group.<BR><BR>Which ones of these 20 are the oldest purchases is irrelevant, because at the date of valuation at the end of Nov 2000 you will have used them all up, anyway, and they are all the same price as well. You would only need to worry if they were at different prices. Just treat it as the opening balance.<BR><BR>Thus<BR><BR>Opening Balance 1/11/00 £20 @ £150<BR><BR>Purchases 3/11/00 £15 @ £160<BR><BR>Sales 12/11/00 10 @ £300<BR>This reduces the stock by 10 items from the opening balance<BR><BR>Purchases 15/11/00 5 @ £155<BR><BR>Sales 25/11/00 15 @ £310<BR>This reduces the stock by 10 items from the opening balance (now all used up) and also by 5 items from the next lot of purchases on 3/11/00.<BR><BR>Sales calc. is straightforward, 10 * £300 + 15 * £310 = £3000 + £4650 = £7650<BR><BR>Closing stock calc.<BR><BR>1/11/00 - none left<BR>3/11/00 10 left @ £160<BR>15/11/00 5 left @ £155<BR><BR>Total: £2375.<BR><BR>Hope this helps<BR><BR>Good luck to you.<BR><BR>Edit0 -
MFR Dec 2000 Past Paper
Thanks that really helps0