The following stock-related transactionsoccurred during the period 1 July to 31December.DateTransaction25 JulyPurchased 150 units of stock @£20 each28 AugustPurchased 225 units of stock @£30 each15 September Sold 305 units of stock @ £45each4 OctoberSold 50 units of stock @ £45each10 November Purchased 410 units of stock @£40 each23 December Sold 100 units of stock @ £75eachAdditional Information:1. The Balance Sheet as at 1 July was asfollows:Bank£10,000Capital Account£10,0002. Two months' credit is received fromsuppliers.3. One month's credit is allowed tocustomers.4. Expenses of £1,400 are paid by chequeeach month as incurred.5. The purchase and sale prices referred toabove are exclusive of VAT. Purchases areliable to VAT at the rate of 10% and sales areliable to VAT at the rate of 20%.Required:Calculate the value of stock on hand at(a)the end of each month during the period 1July to 31 December, using the First In, FirstOut method (FIFO); andPrepare a Trading and Profit and Loss(b)Account and Balance Sheet for the period 1July to 31 December.

FIFO method is based on the assumption that goods that are received first are issued first. this…

Answered: Transac Purchased 150 units of st…

Business

Accounting

Transac Purchased 150 units of st Durcha ced 22E unite of

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Inventory Accounting

Inventory accounting is that branch of accounting that helps in determining the specific value of assets at different stages of production and development.

Question

The following stock-related transactions
occurred during the period 1 July to 31
December.
Date
Transaction
25 July
Purchased 150 units of stock @
£20 each
28 August
Purchased 225 units of stock @
£30 each
15 September Sold 305 units of stock @ £45
each
4 October
Sold 50 units of stock @ £45
each
10 November Purchased 410 units of stock @
£40 each
23 December Sold 100 units of stock @ £75
each
Additional Information:
1. The Balance Sheet as at 1 July was as
follows:
Bank
£10,000
Capital Account
£10,000
2. Two months' credit is received from
suppliers.
3. One month's credit is allowed to
customers.
4. Expenses of £1,400 are paid by cheque
each month as incurred.
5. The purchase and sale prices referred to
above are exclusive of VAT. Purchases are
liable to VAT at the rate of 10% and sales are
liable to VAT at the rate of 20%.
Required:
Calculate the value of stock on hand at
(a)
the end of each month during the period 1
July to 31 December, using the First In, First
Out method (FIFO); and
Prepare a Trading and Profit and Loss
(b)
Account and Balance Sheet for the period 1
July to 31 December.

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