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5.1 Choose a method in COLUMN B that matches the description in COLUMN A - NSC Accounting - Question 5 - 2018 - Paper 1
Question 5
5.1 Choose a method in COLUMN B that matches the description in COLUMN A. Write only the letters (A–E) next to the question numbers (5.1.1–5.1.4) in the ANSWER BOOK.... show full transcript
Worked Solution & Example Answer:5.1 Choose a method in COLUMN B that matches the description in COLUMN A - NSC Accounting - Question 5 - 2018 - Paper 1
Step 5
5.2.1 Calculate the value of the closing stock on 30 June 2018 using the first-in-first-out (FIFO) method.
Answer
To calculate the closing stock using FIFO, we start with the opening stock and add the purchases while subtracting the sales as follows:
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Calculate total purchases:
- September 2017: 850 units at R2,250
- December: 980 units at R2,260
- March 2018: 875 units at R2,563
- June Returns: 25 units (returned purchases)
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Calculate Closing Stock:
- Opening Stock: 420 units
- Purchases: 3,155 units
- Sold: 3,050 units
Thus,
Closing Stock = Opening Stock + Purchases - Sales = 420 + 3,155 - 3,050 = 425 units
- Calculate the valuation for these units:
- From FIFO, we take the latest purchases first:
- Hence,
- 25 units from June at R3,040 = R76,000
- Then, 420 units from September at R2,175 = R1,368,040
Therefore, the total value of closing stock = R1,500,030.
Step 6
5.2.2 Charles suspects that suitcases have been stolen. Provide a calculation to support his concern.
Answer
To support Charles' concern regarding stolen suitcases, we can calculate the difference between opening stock plus purchases and closing stock:
- Total stock available = Opening Stock + Purchases:
- Opening Stock = 420 units
- Purchases = 3,155 units
Total Available = 420 + 3,155 = 3,575 units
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Stock sold = 3,050 units
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Closing Stock = Total Available - Stock Sold = 3,575 - 3,050 = 525 units
Since the reported closing stock is 496 units, the difference indicates possible theft.
Units unaccounted for = 525 - 496 = 29 units.
Step 7
5.2.3 Calculate for how long his closing stock is expected to last.
Answer
To calculate how long the closing stock will last:
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Calculate the closing stock value which is 496 units.
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Daily usage is:
- Daily stock usage = Sales / Number of days in the period = 3,050 units / 12 days = 254.17 units per day
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Duration the closing stock can last:
- Closing Stock Duration = Closing Stock / Daily Usage = 496 / 254.17 ≈ 1.95 days
Hence, the closing stock is expected to last approximately 1.95 days.
Step 8
State ONE problem with keeping too much stock on hand and ONE problem with keeping insufficient stock on hand.
Answer
One problem with keeping too much stock on hand is that it can become obsolete and lead to losses due to unsold inventory. Conversely, keeping insufficient stock may result in lost sales opportunities, as customers may opt to purchase from competitors, leading to decreased revenue.