QUESTION SIX

For six months ended 31^st October, 2013, Luanshya Limited (LL), an importer and distributor of one type of printer’s machine has the following transactions in his records. There was an opening balance of 100 units which had a value of K3,900.

DateBought Quantity in UnitsCost per Unit K

May10041

June20050

August40051.875

The price of K51 875 each for the August receipt was K6.125 per unit less than the normal price because of the large quantity ordered.

DateSold Quantity in UnitsPrice Each K

July 25064

September35070

October10074

Required:

Prepare the stores ledger records using weighted average, FIFO and LIFO methods, showing clearly inventory balance.(9 marks)

Prepare the trading account for the period to show the gross profit using each of the three methods above.(9 marks)

Based on the calculations in (b) comment on the method which can be regarded as the best measure of profit