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General Accounting Discussions: What Will be my Value of Closing Stock

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  1.  
    • CommentAuthorjerry7979
    • CommentTimeNov 2nd 2009
     
    Purchase of Diesel

    Date Gallons Rate Amount
    1Jan 4000 10.00 40000.00
    10Jan 4000 10.00 40000.00
    20Jan 4000 10.00 40000.00
    28Jan 4000 10.50 42000.00

    If say I Sold 8000 Gallons and My Closing Stock Is 16000-8000 = 8000 gallons

    What will be the value of Closing Stock (How will I Calculate the Rate)
    • CommentAuthorpk
    • CommentTimeDec 24th 2009
     
    The value of Closing Stock will be based on the valuation method you follow in your organization.

    If the valuation is based on Weighted Average Method, the the value of closing stock will be as follows:

    [(Old Qty x Old Rate) + (New Qty x New Rate)]/Total Qty

    In your above case, the rate for the remaining 8,000 will be @ 10.125, hence the total value of closing stock will be 81,000


    savin.yakeep@yahoo.com
  3.  
    I agree with you Pk you explained it nicely!
    • CommentAuthorpk
    • CommentTimeJan 4th 2010
     
    If your stock is computed using FIFO method, then the value of closing stock will be 82,000 and if LIFO is followed, the value of closing stock will be 80,000

    So the value of closing stock will vary depends on the valuation method you use.

    Hopes this helps

    savin.yakeep@yahoo.com

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