Question 2 Cicero Supplies Ltd uses a system of perpetual inventory. Regarding the migration of one of its stock lines, it has provided the following information: Month Receipt Opening 200 @ 8.50 Issues Balance 200 @ $8.00 January February March 300 150 @ $9.00 April May June 150 200 @ $9.15 July 250 Required: (a) Calculate the closing stock value at the end of June under each of the stock valuation methods of FIFO, LIFO and AVCO. Work to 2 decimal places. (b) Identify one advantage and one disadvantage for each of the valuation methods: FIFO, LIFO and AVCO.

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A: Details are provided below.Explanation:

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A:

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Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.