Refer to Information B (ii) - NSC Accounting - Question 1 - 2023 - Paper 1

To determine the closing stock of bicycles using the FIFO (First In, First Out) method, we follow these steps:

1. Identify the available stock and sales: Assume we have a beginning inventory and are aware of the quantities sold during the period.

2. Calculate the remaining inventory: Subtract the number of bicycles sold from the total bicycles available for sale. For example, if we started with 740 bicycles and sold 100 (740 - 100 = 640 remaining).

3. Assign costs using FIFO:

   • From the remaining stock, calculate the cost based on the oldest purchases first.
   • For instance:
     • The first 700 bicycles sold at a cost of R2,100 each gives a total cost value of 700 * R2,100 = R1,470,000.
     • The remaining 309 bicycles would then be accounted at R2,020 each, totaling 309 * R2,020 = R624,180.

4. Calculate the total value of closing stock: The total value of closing stock would then equal the sum of the calculated values for the remaining bicycles:

   • Total Value = Closing Stock Value of R2,094,180.

Thus, the closing stock using the FIFO method is R2,094,180.