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FIFO and LIFO Exam Based Problems and Answers

Arjun EP

Published on: April 29, 2021

Exam based problems and answers of FIFO and LIFO are the BEST collection for sure shot success in the examination.

These questions are based on board exam.

These questions are set in easy to difficult series.

Pricing of Material Issue

There are different methods for materials issue; some popular methods are:

(a) First in first out (FIFO) method

(b) Last in last out (LIFO) method

(d) Simple average method

Store Ledger under FIFO or LIFO

Date	Particulars	Purchase/Receipt/Surplus			Issue/Return/Deficit			Balance
		Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
Jan 1	Opening balance							550*	15	8,250
								230 ^#	16	3,680
Jan 5	Issue of materials				100^A	15	1,500	450	15	6,750
					130^B	16	2,080	100	16	1,600

Here:

*It is earliest receipt or balance	^Aearliest issue
^#It is latest receipt or balance	^B latest issue

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Exam Based Problems and Answers of FIFO and LIFO

FIRST IN FIRST OUT (FIFO)

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country

PROBLEM: 1

EP Flour Mills completes its final products through processes A, B and C. The extracted data of material movement for the month of July are given below:

July, 1	Opening inventory	800 units @ Rs 5
July, 8	Purchase	700 units @ Rs 6
July, 15	Issue	1,300 units
July, 25	Purchase	300 units @ Rs 5.5
July, 29	Issue	320 units
July, 30	Shortage	10 units
July, 31	Return from process B to process A	15 units

Required: Store ledger under FIFO method

[Answer: Closing stock 170 units; Rs 935]

* No entry for materials returned from process B to A

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country

PROBLEM: 2

The following are the details of receipts and issues of a material during May:

1.	Opening stock	200 units @ Rs 10 each
3.	Purchased	800 units @ Rs 11 each
5.	Issued	500 units
8.	Purchased	300 units @ Rs 12 each
10.	Returned to vendor	100 units purchased on 3^rd May
12.	Refund of surplus from a work order	10 units from opening stock lot
20.	Issued	600 units
25.	Materials lost	10 units

Required: Store ledger under FIFO method by showing received, issued and balance.

[Answer: 100 units; Rs 1,200]

*Returned from work order is recorded earliest;

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country

PROBLEM: 3

Given below are the transactions of a certain materials for the month of December:

December, 1	Opening stock	800 units @ Rs 100 per unit
11	Purchased	900 units @ Rs 110 per unit
17	Issued	1,000 units
20	Purchased	1,200 units @ Rs 120 per unit
23	Issued	700 units
25	Purchased	500 units @ Rs 130 per unit
27	Return from works	30 units out of 23^rd Dec.
28	Stock verification and loss	10 units
30	Issued	300 units

Required: Store ledger under first-in first- out method

[Answer: (920 + 500) = 1,420 units;

(110,400 + 65,000) = Rs 175,400]

*Materials return is from old stock, so it is recorded first.

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country

PROBLEM: 4

ABC Rice Mill runs through four processes A, B, C and D has following transactions of paddy:

March 1:	Opening stock of paddy	800 units @ Rs 22 per kg
6:	Received from suppliers	1,100 kg paddy @ Rs 23 per unit
14:	Issued	1,400 kg
21:	Returned to suppliers	100 kg
24:	Received from suppliers	1,700 kg paddy @ Rs 24 per kg
26:	Issued	700 kg
27:	Returned from process D to process A	25 kg.
28:	Credit note of stock verification	20 kg.

Required: Store ledger under FIFO method

[Answer: 1,680 units, Rs 40,320; * No entry for March 27]

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country

PROBLEM: 5

MC Sause Industry has following stores transactions for the month of December:

1:	Opening stock	1,000 kg tomato @ Rs 10 per kg
4:	Purchased	800 kg tomato @ Rs 10.50 per kg
5:	Issued	1,200 kg
7:	Purchased	400 kg tomato @ Rs 11 per kg
9:	Issued	600 kg
10:	Received back	20 kg from production house
12:	Purchased	600 kg tomato @ Rs 12 per kg
14:	Issued	500 kg

On 15^th Dec, when the stock is verified, it is found that actual stock is more by 20 kg

Required: Store ledger under FIFO method showing received, issued and balance

[Answer: 540 units, Rs 6,480;

*Surplus 20 units @ Rs 12 = Rs 240;

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country

PROBLEM: 6

AB Snackes Industry makes potato chips. The industry has following data related to potato:

August 1:	Opening stock	600 kg potato @ Rs 20 per kg
4:	Issued	300 kg
11:	Purchased	200 kg potato @ Rs 19 per kg
14:	Returned	20 kg from production
18:	Issued	350 kg
20:	Purchased	300 kg potato @ Rs 21 per kg
22:	Rotten of potato	5 kg threw.
24:	There was	5 kg potato under wright purchased on Aug 20.
23:	Issued	320 kg

Required: Store ledger under first-in-first-out method

[Answer: 140 kg; Rs 2,940;

*Rotten and underweight are deducted;

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country

PROBLEM: 7

Store transactions of BN Company Limited for the month of August are given below:

Aug, 1	: Opening balance	: 1,000 units @ Rs 20 each
4	: Purchased	: 800 units @ Rs 21 each
5	: Issued	: 1,200 units
7	: Purchased	: 400 units @ Rs 22 each
15	: Issued	: 600 units
21	: Received back	: 50 units @ Rs 21 from work order
25	: Stock verification and loss	: 25 units

Required: Store ledger under FIFO method

[Answer: (25 + 400) = 425 units;

Rs (525 + 8,800) = Rs 9,325;

*50 units are recorded as earliest receipt than balance 400 units;

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country

PROBLEM: 8

BC Dairy has following data related to the receipts and issues (delivery) of milk:

May 1	Opening stock 540 liter of milk @ Rs 40 per liter
May 2	Issued (delivery) 500 liter of milk
May 3	Purchased 600 liter of milk @ Rs 40 per liter
May 4	Issued (delivery) 450 liter of milk
May 5	Purchased 600 liter of milk @ Rs 45 per liter
May 5	Added 50 liter of water in the lot of May 15
May 6	Issued (delivery) 550 liter of milk
May 7	Purchased 600 liter of milk @ Rs 41 per liter
May 8	Return from packing department 40 liter of May 6
May 9	Issued (delivery) 600 liter of milk

Required: Store ledger under FIFO method showing component received, issued and balance.

[Answer: 330 liter; Rs 13,530] * Added water meand surplus;

*Return from packing departmrnt is old stock @ Rs 40 per liter;

LAST IN FIRST OUT (LIFO)

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country

PROBLEM: 9

A Firm provides electrical parts transactions for the month of April:

1	Opening balance 250 units @ Rs 5 per unit
2	Receipts from vendor 1000 units @ Rs 6 per unit
5	Issued 750 units
8	Receipts from vendor 1000 units @ Rs 7 per unit
9	Returned to vendor 100 units out of purchase on 2^nd April.
12	Issued 1000 units
15	Returned from departmental issued on 5^th April, 20 units
16	Issued 100 units
25	Shortage in stock taking 10 units

Required: Prepare store ledger under LIFO method showing received, issued and balance.

[Answer: (250 + 60) = 310 units; Rs (1,250 + 360) = 1,610;

*Returned from department is added with same rate balance;

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country

PROBLEM: 10

The following are the store transactions of a certain material during the month of November:

Nov 1	Stock in hand 200 units @ Rs 50 each
Nov 4	Purchase 400 units @ Rs 60 each
Nov 7	Issued 300 units
Nov 12	Purchase 100 units @ Rs 70 each
Nov 16	Returned to store 50 units (issued out of opening stock)
Nov 20	Purchased 200 units @ Rs 80 each
Nov 25	Issued 400 units
Nov 28	Stock verification surplus 20 units
Nov 30	Issued 100 units

Required: Store ledger under the LIFO method

[Answer: 170 units, Rs 8,500]

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country

PROBLEM: 11

A company has purchased and issued the material in following orders:

Oct, 1:	Opening stock 500 units @ Rs 10
3:	Issued 200 units
6:	Transfer of materials from production unit B to A 25 units.
10:	Purchased 200 units @ Rs 9 per unit
15:	Returned of surplus from a work order 10 units @ Rs 9.50 per unit
18:	Issued 180 units
20:	Purchased 300 units @ Rs 9.40 per unit
21:	Issued 400 units
25:	Shortage in stock 10 units
28:	Issued 100 units

Required: Store ledger under last-in-first-out method

[Answer: 120 units, Rs 1,200]

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country

PROBLEM: 12

Following are the store transactions of certain materials during the month of April:

April 1:	Opening stock 500 units @ Rs 10 per unit
5:	Purchased 2,000 units @ Rs 12 per unit
8:	Issued 1,500 units
12:	Purchased 2,000 units @ Rs 14 per unit
14:	Returned to vendor 200 units out of purchased on 5^th April
16:	Issued 2,000 units
18:	Returned from the department, 40 units issued on 8^th April
20:	Issued 200 units
25:	Stock verification and fall short 20 units

Required: Store ledger under last-in-first-out method

[Answer: (500 + 120) = 620 units;

Rs (5,000 + 1,440) = Rs 6,440;

*40 units are added with old stock of Rs 12 per unit

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country

PROBLEM: 13

Following receipts are issues of a material were made during the month of April. Stock on 1^st April was 500 units @ Rs 20 each.

Date	Quantity purchased	Purchase price per unit	Quantity issued
April 3	–	–	200 units
April 5	800 units	Rs 21	–
April 8	–	–	400 units
April 10	–	–	300 units
April 15	500 units	Rs 22	–
April 18	–	–	500 units
April 25	200 units	Rs 22	–

Issued are to be priced under last-in-first-out method. On 18^th April, a physical verification was made when the verifier notified that there is shortage of 20 units in stock.

Required: Store ledger account

[Answer: (300 + 80 + 200) = 580 units;

Rs (6,000 + 1,680 + 4,400) = Rs 12,080;

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country

PROBLEM: 14

AM Manufacturing has following store transactions for the month of December:

1:	Opening balance 500 units @ Rs 30 per unit
3:	Issued 250 units
13:	Received from AB Suppliers 200 units @Rs 28 per unit
14:	Returned from department 15 units @ Rs 25 per unit of November
16:	Issued 300 units
20:	Received from MK Traders 250 units @Rs 26 per unit
22:	Return to MK Traders 50 units
25:	Issued 355 units

Required: Store ledger under last-in first-out method

[Answer: 10 units, Rs 250;

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country

PROBLEM: 15

Nepal Pencils Suppliers has following store ledger for the month of July:

Closing balance of last month June was 300 units @ Rs 2 per unit. Other transactions are:
July, 1	Purchased 200 units @ Rs 3 per unit
July, 5	Issued 300 units
July, 10	Purchased 700 units @ Rs 2 per unit
July, 12	Issued 200 units
July, 12	Returned to supplier 100 units from the lot of 10^th July.
July, 15	Purchased 200 units @ Rs 3 per unit.
July, 18	Issued 100 units
July, 22	Issued 400 units
July, 23	Returned from work order 10 units from 18^th July issued.
July, 28	Issued 300 units

Required: Store ledger under LIFO method showing materials received, issued, and balance

[Answer: 10 units, Rs 20]

Mixed Problems

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country

PROBLEM: 16

AM Manufacturing Company completes its production in three processes A, B and C. Other information related to materials are for the month of March 2020:

Receipt:
March, 1	1,500 units @ Rs 100
12	1,500 units @ Rs 115
21	1,200 units @ Rs 120
Issued:
March, 7	Issued 1,250 units
12	Issued 1,600 units
22	Issued 900 units
Returned:
March, 13	Returned to vender 50 units from the lot of March 1
21	Returned 25 units from production department
25	500 units returned from department C to B
Shortage:
March, 30	Stock verified and found shortage 10 units

Required: Store ledger account under LIFO method

[Answer: (125 + 290) = 415 units;

Rs (12,500 + 38,400) = Rs 50,900]

* No entry for returned from department C to B

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country

PROBLEM: 17

Birgunj Chemicals has following store transactions for the month of January:

January, 1	Opening stock @ Rs 250 per unit	200 units
5	Purchase of materials @ Rs 240 per unit	150 units
6	Issued of materials	120 units
9	Return to supplier due to defective goods	30 units
12	Purchase of materials @ Rs 245 per unit	250 units
16	Excess goods returned from works B to A	20 units
20	Issued of materials	300 units
24	Credit note in store verification	10 units
30	Purchase of materials @ Rs 260 per unit	100 units
31	Closing stock at the end	?

Required: Store ledger under LIFO method

[Answer: (140 + 100) = 240 units;

Rs (35,000 + 26,000) = Rs 61,000]

* Credit note in store verification means shortage

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country

PROBLEM: 18

JR Synthetics has following store transactions of inventory:

June, 1	Opening stock @ Rs 250 per unit	200 units
5	Issued (materials requisition note No.85)	100 units
6	Received from JK Suppliers RN 31 @ Rs 230 per unit	150 units
9	Issued (materials requisition note No.85)	170 units
10	Return to JK Suppliers	20 units
16	Received from BC Company RN 32@ Rs 240 per unit	250 units
20	Return from work order (material return note No.5)	40 units
22	Issued (materials requisition note No. 87)	260 units
24	Received replacement goods from JK Suppliers RN 31	20 units
26	Debit note in store verification	10 units
28	Issued (materials requisition note No. 88)	100 units
29	Transfer from department A to department B	25 units
30	Closing stock at the end	?

Required: Store ledger under FIFO method

[Answer: Closing stock: 20 units @ Rs 240 = Rs 4,800]

* Debit note in store verification means surplus

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country

PROBLEM: 19

The following are the information in respect of receipt and issue of stores for the month of April:

April, 1	Opening stock @ Rs 25 per unit	2,000 units
5	Received (goods receipt note No. 25) @ Rs 30 per unit	2,500 units
10	Issued (materials requisition Note No. 50)	2,500 units
12	Return to suppliers due to defective goods	500 units
15	Received (goods receipt note No. 26) @ Rs 20 per unit	2,500 units
20	Return from work order (material return note No. 5)	50 units
25	Issued (materials requisition note No. 51)	2,000 units
26	Shortage in store verification	10 units
30	Issued (materials requisition note No. 52)	1,540 units
30	Goods transferred from work order B to C	300 units

Required: Store ledger under FIFO method and LIFO method

[Answer: FIFO: 500 units and Rs 10,000;

LIFO: 500 units and Rs 12,500]

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country

PROBLEM: 20

ES Manufacturing Company has following information for the month of January:

Jan, 1	Opening balance of materials 1,500 kgs @ Rs 11,000 per quintal
5	Purchased 2,500 kgs @ Rs 12,000 per quintal
10	Issued 2,700 kgs
11	transferred from department B to C 2,000 kgs
15	Issued 500 kgs.
20	Purchased 2,500 kgs @ Rs 12,500 per quintal
25	Issued 1,100 kgs.
28	Stock verification found 50 kgs as excess and adjusted.
31	Purchased 500 kgs @ Rs 15,000 per quintal