A businessman started trading with a capital in cash of £6 000 which he placed in the business bank account at the outset.

His transactions, none of which were on credit, were as follows (in date sequence) for the first accounting period. All takings were banked immediately and all suppliers were paid by cheque. He traded in only one line of merchandise.

In addition he incurred expenses amounting to £1 740, of which he still owed £570 at the end of the period.
Required:
Prepare separately using both the FIFO (first in first out) and the LIFO (last in first out) methods of stock valuation:

(a) a statement of cost of sales for the period, and

(b) a balance sheet at the end of the period.
Note: workings are an integral part of the answer and must be shown

Transcribed Image Text:

Purchases Sales Quantity Price per unit Quantity f Price per unit 1 200 1.00 1 000 1.05 800 1.70 600 1.10 600 1.90 900 1.20 1 100 2.00 800 1.25 1 300 2.00 700 1.30 400 2.05