Use the information below to answer questions

Jan. 1 Received 1,000 units at N10 each

Jan. 2 Received 2,000 units at N12 each

Jan. 3 Issued 1,500 units

Jan. 4 Received 1,000 units at N11 each

Jan. 5 Issued 1,000 units

Using FIFO method, what is the value of the closing stock?

  • A N34,000
  • B N29,000
  • C N17,000
  • D N12,000
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The correct answer is C. N17,000

FIFO means first in first out. This method assumes that the oldest products in a company’s inventory have been sold first. The costs paid for those oldest products are the ones used in the calculation.
issue price method Date Receipt     Issue   Balance    
FIFO   Qty price Value Qty price Value Qty value
1/1 1000 10 10000 - - - 1000 10000
2/1 2000 12 24000 - - - 3000 34000
3/1 - - - 1500 - 1500 1500 18000
4/1 1000 11 11000 - - 2500 2500 27,500
  5/1 - - - 1000   1500 1500 16500
From the table above, value of closing stock using FIFO =  Total closing stock = 1500 previous stock bought at N12 = 500 units Last stock bought at N11 = 1000 units 12 x 500 + (11 x 1000) = 17,000 Previous question Next question