NSC Accounting Inventory systems: This branch sells Arctic TV sets

This branch sells Arctic TV sets - NSC Accounting - Question 2 - 2023 - Paper 2

Question 2

This branch sells Arctic TV sets. 2.1.1 Calculate the value of the closing stock of the Arctic TV sets on 28 February 2023 using the first-in-first-out (FIFO) metho... show full transcript

Worked Solution & Example Answer:This branch sells Arctic TV sets - NSC Accounting - Question 2 - 2023 - Paper 2

Step 1

Calculate the value of the closing stock of the Arctic TV sets on 28 February 2023 using the first-in-first-out (FIFO) method.

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Answer

To calculate the value of the closing stock using the FIFO method, we start with the remaining units of stock:

Units sold: 1550 total units (based on closing stock calculation).
Units remaining in stock: 270 units on 28 February 2023.

Calculate how many units are left from each batch of stock:
- From the opening stock of 280 units, subtract 10 units (240 units remain).
- From the first purchase (800 units), subtract again (30 units remain). So we take:
  - 240 units at R4,100 each = R984,000.
  - 30 units at R3,800 each = R114,000.
Add the values of the remaining units:
- Total value = R984,000 + R114,000 = R1,098,000.

Thus, the value of the closing stock is: R1,098,000.

Step 2

Calculate the stockholding period (in days) using the closing stock figure on 28 February 2023.

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Answer

To calculate the stockholding period:

Formula: $\text{Stockholding Period (days)} = \left(\frac{\text{Closing Stock}}{\text{Cost of Sales}}\right) \times 365$

Using the approximate stockholding period:

Given the closing stock (R1,098,000) and cost of sales (R6,010,000), the calculation becomes:

Substitute the values into the formula: $\left(\frac{1,098,000}{6,010,000}\right) \times 365$
Calculate the stockholding period: $\left(\frac{1,098,000}{6,010,000}\right) \times 365 \approx 67.3 \text{ days}$

Thus, the stockholding period is approximately 67 days.

This branch sells Arctic TV sets - NSC Accounting - Question 2 - 2023 - Paper 2

Worked Solution & Example Answer:This branch sells Arctic TV sets - NSC Accounting - Question 2 - 2023 - Paper 2

Calculate the value of the closing stock of the Arctic TV sets on 28 February 2023 using the first-in-first-out (FIFO) method.

Calculate the stockholding period (in days) using the closing stock figure on 28 February 2023.

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