CMA Intermediate · Corporate Accounting and Auditing · Inventories (Ind AS 2)
Sharma Traders opened with 100 units at ₹50 each. It then purchased 200 units at ₹59 each and sold 150 units. Using the FIFO formula, what is the cost of the closing inventory of 150 units?
Closing inventory under FIFO is ₹8,850. Sales of 150 units consume the opening 100 units and 50 units of the new purchase, leaving 150 units of the latest purchase at ₹59 each.
- A₹8,850Correct
- B₹8,300
- C₹7,500
- D₹8,000
Explanation
Under FIFO the 150 units sold come from the opening 100 units and 50 units of the purchase. Remaining stock is 150 units of the purchase at ₹59 = ₹8,850. Weighted average would give (5,000+11,800)/300 = ₹56 per unit, i.e. ₹8,400, not FIFO. The ₹8,300 option wrongly mixes in older cost.
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