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FIFO, Kaplan chapter 6 test 9

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › FIFO, Kaplan chapter 6 test 9

  • This topic has 3 replies, 2 voices, and was last updated 2 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • September 5, 2022 at 3:51 pm #665240
    Sho1234
    Member
    • Topics: 1
    • Replies: 1
    • ☆

    Here is the question that’s troubling me,

    The business commences trading on 1st January and purchases were made as follows:

    Month: Num of Units: Unit Price: Value:

    Jan 380 2.00 760
    Feb 400 2.50 1000
    Mar 350 2.50 875
    Apr 420 2.75 1155
    May 430 3.00 1290
    Jun 440 3.25 1430

    In June 1420 articles were sold for 7000 dollars.

    What is the cost of closing inventory and gross profit for the period using the FIFO method?

    Closing Inventory//Gross profit

    A. 2690//3180
    B. 2310//2800
    c. 3077//3567

    Now in the answer it says C. We know theres 1000 units in hand, it says “FIFO – inventory valued at the latest purchase price” (it didnt mention latest purchase price in the question? And that doesnt align with what I’ve learnt about FIFO)

    Then breaks it down in the answer:

    440 Articles at 3.25 total 1430
    430 articles at 3.00 total 1290
    130 articles at 2.75 total 357

    I’m really confused because those results go from LIFO last in first out starting from june going towards july, I thought lifo was selling the first items that came in in January so it would be

    320 articles at 2.00
    ect….

    Please tell me how to understand this, I’ve copied the question and answer word for word

    September 5, 2022 at 6:12 pm #665280
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    I explain in detail how FIFO works in my free lectures 🙂

    The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.

    September 7, 2022 at 9:34 am #665566
    Sho1234
    Member
    • Topics: 1
    • Replies: 1
    • ☆

    Hi John,
    Thank you, I will be checking out the lectures,
    but for not do you have an explanation for this question?
    Thank you

    September 7, 2022 at 4:56 pm #665628
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    Please watch the lecture and then ask if anything in the lecture is not clear.

    You cannot expect me to work through an answer provided by another tuition provider, especially if you are not watching our lectures.

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘FIFO, Kaplan chapter 6 test 9’ is closed to new replies.

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