8.10 Stoval Ltd started to trade on 1 January 20X1. Its purchases of trading stock, at cost, during the first three years of business were

£

20X1 240,000 20X2 252,000 20X3 324,000 The values of stock at 31 December, under different valuation methods, were Lower of FIFO cost and net 31 December LIFO cost FIFO cost realizable value 20X1 £96,480 £96,000 £88,800 20X2 £87,360 £86,400 £81,600 20X3 £100,320 £105,600 £105,600

(a) Assuming that in any one year prices moved either up or down, but not both:

(i) Did prices go up or down in 20X1?

(ii) Did prices go up or down in 20X3?

(b) Which stock valuation method would show the highest profit for 20X1?

(c) Which stock valuation method applied to opening and closing stock would show the highest profit for 20X3?

(d) Which stock valuation method would show the lowest profit for all three years combined?