8.6 Smith’s stock at 1 January consisted of 100 units. Smith uses the average cost method of stock/cost of goods sold.

The stock as at that date was as follows:

100 units @ £725 each, average cost = £72,500 During the year Smith made the following purchases and sales:
Purchases Sales (units)
February 20 April 200 @ £750 June 180 October 100 @£780 November 60 Calculate Smith’s cost of goods sold for the year and his stock as at the end of the year 135