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Home /  FIFO, LIFO and WAC
  • 27858 Views
  • Estimated reading time : 148 Minutes
  • 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

    (c) Weighted average cost (WAC) 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

     

     

     

    100A

    15

    1,500

    450

    15

    6,750

     

     

     

     

     

    130B

    16

    2,080

    100

    16

    1,600

     

    Here:

    *It is earliest receipt or balance

    A earliest 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 3rd 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 23rd 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 15th 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 2nd April.

    12

    Issued 1000 units

    15

    Returned from departmental issued on 5th 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 5th April

              16:

    Issued 2,000 units

              18:

    Returned from the department, 40 units issued on 8th 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 1st 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 18th 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 10th 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 18th 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

    Required: Stock Ledger on the basis of FIFO method and LIFO method

    [Answer: FIFO: (2,250 + 500) = 2,750 units;

    Rs (281,250 + 75,000) = Rs 356,250]

    LIFO: (800 + 1,450 + 500) = 2,750 units;

    Rs (88,000 + 181,250 + 75,000) = Rs 344,250]

    *Change per quintal into per kg by dividing 100 kg]

     

     

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