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