Acca financial Accounting (FA) Study Text ac ca (FA)

Inventory 

106

 

KAPLAN PUBLISHING

 

 

Illustration 3 

 

Invicta has closing inventory of 5 units at a cost of $3.50 per unit at 

31 December 20X5. During the first week of January 20X6, Invicta 

entered into the following transactions: 

Purchases 

•

 

2nd January – 5 units at $4.00 per unit 

•

 

4th January – 5 units at $5.00 per unit 

•

 

6th January – 5 units at $5.50 per unit 

Invicta sold 7 units for $10.00 per unit on 5th January. 

Required: 

(a) 

Calculate the value of the closing inventory at the end of the 

first week of trading using the following inventory valuation 

methods: 

1 

FIFO 

2 

periodic weighted average cost 

3 

continuous weighted average cost. 

(b) 

Prepare the statement of profit or loss (sales revenue, cost of 

sales, gross profit) for the first week of trading using each 

method of inventory valuation.

 

 

 

Solution to Illustration 3 

 (a) 

1