14:Oil India is a bulk distributor of high octane petrol. A periodic inventory of petrol on hand s taken when the books are closed at the end of each month. The following summary of information is available for the month of June, 2007: Rs. 945,000 25,000 2.85 per liter 3.03 per liter 130,000 liters Sales General administration cost Opening Stock 10, 000 liters @ Rs. 3 per liter Purchases (including freight) June 01:: 200,000 liters @ June 30: 100,000 liters @ Compute the following data by the FIFO and weighted average method of inventory costing: Closing stock on June 30 a) Value of inventory on Jun 30. by Amount of the cost of goods sold for June. Profit or loss for June oducts
Answers
The amount of goods sold for June as per FIFO method is 7,84,500. A net profit of Rs.1,40,000 is obtained for June Products.
Given:
For the month of June, 2007: Rs.945,000 25,000 2.85 per liter 3.03 per liter 130,000 liters
Sales General administration cost opening Stock 10, 000 liters @ Rs.3 per liter Purchases (including freight)
June 01:: 200,000 liters @ June 30: 100,000 liters
To find:
Amount of the cost of goods sold for June.
Profit or loss for June products.
Solution:
Net profit = sales - cost of goods sold - general administrative costs = 9,45,000 - 7,80,000 - 25,000 = 1,40,000
Quantity of sold goods= Opening stock + purchases - Closing stock = 1,00,000 + 3,00,000 - 1,30,000 = 2,70,000
Amount of goods sold (according to FIFO) = 1,000,000 x 3 = 3,000,000 170,000 x 2.85 = 4,84,500 = 7,84,500.
Thus, using FIFO method, the amount of goods sold in the month of June is found to be 7,84,500 and a net profit of Rs.1,40,000 is obtained.
#SPJ2