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QUESTION 1: COMPANY FINANCIAL STATEMENTS The following information was taken from the accounting records of Violet Limited. The financial year ended on 28 February 2025. The company trades with women’s and men’s clothing.

Accounting

ScanSolve AI Answer

Answer

R238 400R238\,400

Step-by-step solution

4 steps

Here's how to calculate the correct value of the closing stock using the weighted-average method:

  1. Calculate the total units available for sale.

    Total units available=Opening stock units+Purchased units−Returned units\text{Total units available} = \text{Opening stock units} + \text{Purchased units} - \text{Returned units} Total units available=4 500+(7 500+1 500+820)−520\text{Total units available} = 4\,500 + (7\,500 + 1\,500 + 820) - 520 Total units available=4 500+9 820−520\text{Total units available} = 4\,500 + 9\,820 - 520 Total units available=13 800 units\text{Total units available} = 13\,800 \text{ units}

  2. Calculate the total cost of units available for sale.

    Total cost available=Opening stock value+Total purchase value−Value of returned units\text{Total cost available} = \text{Opening stock value} + \text{Total purchase value} - \text{Value of returned units} Total cost available=(4 500×R50)+(7 500×R55+1 500×R58+820×R60)−(520×R50)\text{Total cost available} = (4\,500 \times R50) + (7\,500 \times R55 + 1\,500 \times R58 + 820 \times R60) - (520 \times R50) Total cost available=R225 000+(R412 500+R87 000+R49 200)−R26 000\text{Total cost available} = R225\,000 + (R412\,500 + R87\,000 + R49\,200) - R26\,000 Total cost available=R225 000+R548 700−R26 000\text{Total cost available} = R225\,000 + R548\,700 - R26\,000 Total cost available=R747 700\text{Total cost available} = R747\,700

  3. Calculate the weighted-average cost per unit.

    Weighted-average cost per unit=Total cost availableTotal units available\text{Weighted-average cost per unit} = \frac{\text{Total cost available}}{\text{Total units available}} Weighted-average cost per unit=R747 70013 800 units\text{Weighted-average cost per unit} = \frac{R747\,700}{13\,800 \text{ units}} Weighted-average cost per unit≈R54.18116 per unit\text{Weighted-average cost per unit} \approx R54.18116 \text{ per unit}

  4. Calculate the value of the closing stock.

    Value of closing stock=Closing stock units×Weighted-average cost per unit\text{Value of closing stock} = \text{Closing stock units} \times \text{Weighted-average cost per unit} Value of closing stock=4 400 units×R54.18116 per unit\text{Value of closing stock} = 4\,400 \text{ units} \times R54.18116 \text{ per unit} Value of closing stock=R238 400\text{Value of closing stock} = \boxed{R238\,400}
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