QUESTION 3:

Magneto presents you with the following information for the year to 31^st Jan 2021.

Purchases	RM58,000
Purchase return	RM5,000
Sales	RM100,000
Sales returns	RM10,000
Stocks at 1st Feb 2020	RM4,000

Magneto is not sure how to value the stock as at 31^st Jan 2021. There are three methods have been suggested:

Method 1	RM10,000
Method 2	RM20,000
Method 3	RM8,000

Required:

1. Calculate the effect on gross profit for the year to 31^st Jan 2021 by using each of the three methods of stock valuation.

(20 Mark)