1. **Problem Statement:** Prepare a stores ledger card for Gabon Ltd for March 2020 using the FIFO (First-In, First-Out) inventory method and find the value of the closing stock. 2. **Given Data:** - Opening stock (Feb 29): 2,500 units valued at 90,000 - Purchases in March: - Mar 13: 1,000 units @ 38 - Mar 20: 1,200 units @ 39 - Mar 25: 1,600 units @ 40 - Mar 28: 500 units @ 38 - Sales in March: - Mar 3: 350 units - Mar 4: 500 units - Mar 16: 400 units - Mar 24: 900 units - Mar 26: 1,900 units 3. **FIFO Method Explanation:** FIFO assumes the oldest inventory is sold first. So, sales reduce the earliest stock first. 4. **Step-by-step Ledger Calculation:** - Opening stock: 2,500 units @ sh.36 per unit (since 90,000/2,500 = 36) - Sales on Mar 3 (350 units): reduce from opening stock Remaining opening stock: 2,500 - 350 = 2,150 units - Sales on Mar 4 (500 units): reduce from opening stock Remaining opening stock: 2,150 - 500 = 1,650 units - Purchase on Mar 13: add 1,000 units @ 38 - Sales on Mar 16 (400 units): reduce from opening stock Remaining opening stock: 1,650 - 400 = 1,250 units - Purchase on Mar 20: add 1,200 units @ 39 - Sales on Mar 24 (900 units): reduce from opening stock Remaining opening stock: 1,250 - 900 = 350 units - Purchase on Mar 25: add 1,600 units @ 40 - Sales on Mar 26 (1,900 units): reduce first from opening stock (350 units), then from Mar 13 purchase (1,000 units), then from Mar 20 purchase (550 units) Remaining Mar 20 purchase: 1,200 - 550 = 650 units - Purchase on Mar 28: add 500 units @ 38 5. **Calculate closing stock units:** - Remaining from Mar 20 purchase: 650 units @ 39 - Remaining from Mar 25 purchase: 1,600 units @ 40 - Remaining from Mar 28 purchase: 500 units @ 38 Total closing stock units = 650 + 1,600 + 500 = 2,750 units 6. **Calculate closing stock value:** $$\text{Value} = 650 \times 39 + 1,600 \times 40 + 500 \times 38$$ $$= 25,350 + 64,000 + 19,000 = 108,350$$ **Final answer:** Closing stock value = sh.108,350 --- **Stores Ledger Card Summary:** - Opening stock: 2,500 units @ 36 - Purchases: 4,300 units (1,000@38, 1,200@39, 1,600@40, 500@38) - Sales: 4,050 units - Closing stock: 2,750 units valued at sh.108,350