Page 49 - Accountancy_F5

Thus, the value of the closing inventory of 140 units will be calculated as follows:

Unit costs Total costs
Month Units
TZS TZS
January 20 6,000 120,000
March 120 6,200 744,000
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Total 140 864,000

Therefore, the cost of goods sold will be calculated as follows:

TZS
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Total purchases 8,320,000

Less: Closing inventory (864,000)
Cost of sales 7,456,000

(c) Weighted average cost method under the periodic stock-taking system:
This method uses weighted average costs for the year, calculated as follows:

Value of closing inventory = 140 units × TZS 6,400 per unit = TZS 896,000. The cost
of sales will be:
TZS
Total purchases 8,320,000

Less: Closing inventory (896,000)
Cost of sales 7,424,000

Example 2.2
Using the data provided in Example 2.2, prepare an inventory valuation sheet based
on the three methods (FIFO, LIFO and WAM) under the perpetual inventory-taking
system.

Solution 2.2
In the perpetual inventory system, the use of an inventory record card (also known as an
inventory sheet or inventory valuation sheet) is essential. This tool primarily serves to
track inventory purchases, sales, and quantities on hand. It also facilitates the valuation

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