Hi!

yup, I have worked out the question, but I'm not really sure about it that's why I am asking. Here's the question & then how I worked it out. Just tell me whether its correct. Will really appreciate it =)

On 1st August the petrol tank was empty.

2nd August received 10,000 litres of petrol @ 0.75 per litre

Next day, 5000 litres were received @ 0.78 per litre

On 5th Aug 6000 litres were sold

Same day, another 1000 litres were received @ 0.79

on 7th Aug 2000 litres were sold

Calculate the closing stock values usign all the 3 methods, LIFO, FIFO, AVCO

here's my working for FIFO oNLY:

10,000-6000= 4000... since 6000 litres were sold

4000*0.75= 3000
5000*0.78= 3900

1000*0.79= 790

2000 litres were sold again.. so 4000-2000= 2000

hence: 2000*0.75= 1500
5000*0.78= 3900
1000*0.79= 790
----- -----
8000 6190

so value of ending inventory = 6190

is it right?

Ending Inventory Value using FIFO:
2,000 litres x 0.75 = 1,500
5,000 litres x 0.78 = 3,900
1,000 litres x 0.79 = 790

Total = 1,500 + 3,900 + 790 = $6,190


Yes, 6,190 is correct.

awww Thank you SOOOO much for taking the trouble to reply & answer my question! =) thanks a lot! God bless you :)

Hi, I have an accounting test tomorrow and completed your question for test practice. Since you helped me, I will care to help you too. I got the same answer as you guys for FIFO.

And for LIFO:

8000 x £0.75 = £6,000 :)

If you read this and you need a further explanation, I will be here. Good Luck :eek:

For AVCO I worked out the answer to be £6, 160.

dear,
Your method and answer is completely wrong
first let me tell u that """FIFO means first in first out""
so we have to issue from the items that were received first... the first item received was 10,000 litres at 0.75.. so first we have to issue all this 10,000
and after then we move to second received item... so as total issues are 6000+2000=8000 so 8000*0.75 = $6000 (closing inventory monatry value)
total recievable-total isues=closing inventory
16000(10000+5000+1000) + 8000 (6000+2000)= 8000