JAMB Accounts Principles of Accounts 2012 Paper

Concept:Under the simple average method, a single average price is calculated from all purchase prices, and closing stock is valued at that average price.Explanation:First, find the total quantity purchased:$100 + 60 + 180 = 340$ bags.Find the total quantity issued:$85 + 145 = 230$ bags.Closing stock after 22/5/07 is:$340 - 230 = 110$ bags.Next, calculate the simple average unit price by adding the unit purchase prices and dividing by the number of purchases:$$\frac{10.00 + 11.50 + 12.80}{3} = \frac{34.30}{3} = 11.4333$$Value the closing stock with this average price:$11.4333 \times 110 = 1257.67$So, the value of stock after 22/5/07 is #1,257.67.Answer:C. #1,257.67