Using the information in the example below, discuss the accounting treatment of each transaction and the possible value of the stock at the end of the month.

Stern has recently gone into business assembling hang gliders. Details of the transactions for the first month are given below.

Day 1 Opened a bank account for the business and paid in £50000 of his own money.

Purchased assembly machinery for £40 000 cash.

Rented factory space at a rental of £200 per month and paid one month's rent in advance.

Day 2 Bought 1000 m of tubing for the hang glider frames at a price of

£250 per lOOm and paid the £2500 in cash.

Day 3 Purchased 150 sets of material for sails for £20 per set and paid the £3000 immediately. Each hang glider takes one set of sails.

Day 8 Received an order for 20 hang gliders at £400 each together with a cheque for £8000.

Day 9 Banked the cheque and commenced manufacture of the hang gliders.

Day 14 Completed manufacture of the 20 hang gliders and despatched the completed order to the customer, paymg the delivery charges of £200 immediately.
At this stage it was possible to do some preliminary calculations relating to the manufacture of each hang glider. These calculations showed that each hang glider required the following:
Labour Materials Sail machining Frame assembly Final assemblv Metal tubing Sails 30 min per unit 2 h per unit 30 min per unit 4 m per unit one set per unit Day 15 Received an order for another 200 hang gliders at a price of £250 each. Payment is to be made on a cash-on-delivery basis.
Day 16 Commenced work on the new order.
Day 26 Purchased another 100 sets of sails and paid for them in cash.
The price had gone up to £22.00 per set, making a total of £2200.
Day 30 Paid wages of £320 for the month based on four 40 h weeks at £2 per hour.
Day 31 Established the position at the end of the month as follows:
Completed hang gliders ready for delivery 20 Manufactured frames I 0 Stocks of materials were as follows:
Steel tubing in stock Sets of sails in stock i'\OOm 210 sets