LTT Had Stock on Hand on the 1st January 2018 $\quad$

question 44

Essay

LTT had stock on hand on the 1st January 2018 of 100 heaters valued at $50 each.
The following transactions occurred during January:
Jan 7 $\quad$ bought 110 heaters at $\$ 52$ each
$\quad$ 15 $\quad$ sold 60 heaters at $\$ 80$ each (selling price
$\quad$ 30 $\quad$ sold 70 heaters at $\$ 80$ each (selling price) REQUIRED:
a)Calculate cost of sales and closing stock at the end of the month from the above information using:
i) $\quad$ the FIFO methed of valuation,
ii) $\quad$ the LIFO method of valuation, and
iii) $\quad$ the average cost method of valuation. b)Prepare a statement of comprehensive income for the month ended 31 January under each method assuming no stock loss (use a columnar approach).
c) 1) Which method produces the most favourable profit result for LTT?
ii) Comment on why the differences in profit have occurred under the 3 methods.

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Definitions:

Fiber

A type of material used in making textiles or a dietary component found in foods, or in technology, thin strands of glass or plastic used in fiber-optic communications.

LEO

Stands for Low Earth Orbit, which is the region of space around Earth at altitudes between 160 to 2,000 kilometers, used by satellites for a variety of applications.

MEO

Medium Earth Orbit, referring to satellites that orbit the earth at altitudes between Low Earth Orbit (LEO) and Geostationary Orbit (GEO), commonly used for navigation and communication.

Low-Power Transmitters

Electronic devices designed to broadcast signals over a short distance with limited power output, often used in personal or localized broadcasting scenarios.