Prepare a Stores Ledger Account showing the receipts and issues, pricing the materials issued on the basis of Weighted Average.

Steps to Solve

1. Calculate Total Units and Value for Each Receipt

   We begin by calculating the total units received and their respective total values:

   • Opening Stock:

     • Units: 200
     • Value: $200 \times 3.50 = 700$

   • Purchase on October 3:

     • Units: 300
     • Value: $300 \times 4.00 = 1200$

   • Purchase on October 13:

     • Units: 900
     • Value: $900 \times 4.30 = 3870$

   • Purchase on October 23:

     • Units: 600
     • Value: $600 \times 3.80 = 2280$

   The total units received = $200 + 300 + 900 + 600 = 2000$ units

   The total value received = $700 + 1200 + 3870 + 2280 = 8050$.

2. Calculate Weighted Average Cost per Unit

   The weighted average cost per unit is calculated using the total value divided by the total units:

   $$ \text{Weighted Average Cost} = \frac{\text{Total Value}}{\text{Total Units}} = \frac{8050}{2000} = 4.025 $$

3. Record Issues and Calculate Cost for Each Issue

   We need to apply the weighted average cost to the issued units:

   • October 5: Issued 400 units

     • Cost: $400 \times 4.025 = 1610$

   • October 15: Issued 600 units

     • Cost: $600 \times 4.025 = 2415$

   • October 25: Issued 600 units

     • Cost: $600 \times 4.025 = 2415$

4. Prepare the Stores Ledger Account

   We will summarize the receipts and issues in the ledger format:

   Stores Ledger Account
   Date      | Description    | Units  | Price/unit | Total Value
   ----------------------------------------------------------
   01/10     | Opening Stock  |   200  |   3.50     |    700
   03/10     | Purchase       |   300  |   4.00     |   1200
   13/10     | Purchase       |   900  |   4.30     |   3870
   23/10     | Purchase       |   600  |   3.80     |   2280
   ----------------------------------------------------------
   Total     |                |  2000  |            |   8050
   ----------------------------------------------------------
   05/10     | Issued         |   400  |   4.025    |   1610
   15/10     | Issued         |   600  |   4.025    |   2415
   25/10     | Issued         |   600  |   4.025    |   2415
   ----------------------------------------------------------
   Total     |                |  1600  |            |   5440
   

5. Calculate Remaining Stock and Value

   Remaining units will be calculated as total received minus total issued:

   $$ \text{Remaining Units} = 2000 - 1600 = 400 $$

   The remaining value is calculated as:

   $$ \text{Remaining Value} = \text{Remaining Units} \times \text{Weighted Average Cost} = 400 \times 4.025 = 1610 $$