Question

Calculate issue price for 750 units on 07.07.2020 under weighted Average
Price: Opening stock as on 01.07.2020, 500 units @ Rs. 20 per unit and
Purchases on 05.07.2020, 400 units @ Rs. 21 per unit.
Rs. 21
Rs. 20.44
ORs 20.50
Rs. 20
Submit
Type here to search
O.​

Answer 1

Answer: The issue price of the stock:-20.44 rupees per unit

Step-by-step explanation:

junaidvhora78619

22.01.2021

Math

Secondary School

Calculate issue price for 750 units on 07.07.2020 under weighted Average

Price: Opening stock as on 01.07.2020, 500 units @ Rs. 20 per unit and

Purchases on 05.07.2020, 400 units @ Rs. 21 per unit.

Rs. 21

Rs. 20.44

ORs 20.50

Rs. 20

Submit

Type here to search

O.​:-The question asks for the issue price first understand what is the issue price and get an fixed idea of this term and start the problem:-

An issue price refers to the initial cost of a security when it first becomes available for purchase by the public. Sometimes, the term is also used to define a dollar amount requested from the market to the issuer in exchange for a share, bond, or other type of security.

The opening stock is 500 unit at 20 Aand 400 at 21 so the issue price is the weighted average of the costs of the stocks which is:-

Average= cost1*quantity1+cost2*quantity2/total.

Average=500*20+400*21/900=20.44(Answer).

Answer:-The issue price of the stock:-20.44 rupees per unit.

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Answer 2

The issue price for 750 units under weighted average method is Rs.20.44. Option (C)

Given:

Opening stock on 1/7/20 500 units @ 20 per unit

5/7/20 Purchased 400 units @ 21 per unit

To find:

7/7/20 Issue price for 750 units under WAM

Solution:

Stores ledger account as per WAM

Date        Receipts                               Issues                           Balance

          Qty     Rate    Amount.   Qty    Rate    Amount    Qty    Rate    Amount

1/7                                                                                       500    20      10,000

5/7      400      21       8400                                                900    20.44   18,400

7/7                                               750   20.44   15,330

As per weighted average method the quantity is added when purchased and subtracted when sold. The total amount column is also added when purchased. To find the rate per unit, the amount is divided by quantity. Using this methodology the issue price is computed as per weighted-average method.

Therefore, as per weighted-average method the 750 units should be issued at Rs.20.44 per unit Option (C).

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