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Illustration: 1
Sumit Ltd. has purchased and issued the materials in the following order:
Solution:
(A) FIFO
Date Receipts Issues Balance
Units Price Amount Units Price Amount Units Price Value
1-8-2003 Opng. - - - - - Nil Nil Nil
1-8-2003 300 3.00 900 - - - 300 3.00 900
4-8-2003 600 4.00 2,400 - - - 300 3.00 900
600 4.00 2,400
6-8-2003 - - - 300 3.00 900 400 4.00 1,600
200 4.00 800
10-8-2003 700 4.00 2,800 - - - 400 4.00 1,600
700 4.00 2,800
15-8-2003 - - - 400 4.00 1,600 300 4.00 1,200
400 4.00 1,600
20-8-2003 300 5.00 1,500 - - - 300 4.00 1,200
300 5.00 1,500
23-8-2003 - - - 100 4.00 400 200 4.00 800
300 5.00 1,500
STOCK LEDGER
Date Receipts Issues Balance
Units Price Amount Units Wt. Avg. Amount Units Value
rate
01-8-2003 Opng. - - - - - Nil Nil
01-8-2003 300 3.00 900 - - - 300 900
04-8-2003 600 4.00 2,400 - - - 900 3,300
06-8-2003 - - - 500 3.67 1,835 400 1,465
10-8-2003 700 4.00 2,800 - - - 1,100 4,265
15-8-2003 - - - 800 3.88 3,104 300 1,161
20-8-2003 300 5.00 1,500 - - - 600 2,661
23-8-2003 - - - 100 4.44 444 500 2,217
Working Notes:
(1) Issue on August 6 is valued at Rs. 3.67 which is the weighted average rate, arrived at as follows:
900 + 2,400 = 3,300 = 3.666 r/o 3.67
300 + 600 900
(2) Issue on August 15 is valued at Rs. 3.88 per kg. which is the weighted average rate arrived at as
follows:
1,465 + 2,800 = 4,265 = 3.877 r/o 3.88
400 + 700 1,100
(3) Issue on August 23 is valued at Rs. 4.44 per kg. which is the weighted average rate arrived at as
follows:
1,161 + 1,500 = 2,661 = 4.435 r/o 4.44
300 + 300 600
Therefore, the value of stock as on 31-8-2003 : 500 units @ Rs. 4.44 = Rs. 2,217
Illustration: 2
Calculate by FIFO method and weighted Average Cost of inventory valuation, the cost of goods sold and
value of closing inventory from the following data:
Solution:
(1 ) First In First Out (FIFO)
Stores Ledger Account
Cost of goods sold = Opening stock + Purchases - Closing Stock = 30,000 + 46,950 3,750 = Rs. 73,200
Value of closing inventory Rs. 3,750
Illustration: 3
The following are the details of a spare part of Sriram Mills:
Solution :
(A) FIFO Method :
STOCK LEDGER
Date Receipts Issues Balance
Units Price Amount Units Price Amount Units Price Value
01-1-2004 Opng. - - - - - Nil Nil Nil
01-1-2004 100 30.00 3,000 - - - 100 30.00 3,000
15-1-2004 - - - 50 30.00 1,500 50 30.00 1,500
01-2-2004 200 40.00 8,000 - - - 50 30.00 1,500
200 40.00 8,000
15-2-2004 - - - 50 30.00 1,500 150 40.00 6,000
50 40.00 2,000
20-2-2004 - - - 100 40.00 4,000 50 40.00 2,000
01-3-2004 150 50.00 7,500 - - - 50 40.00 2,000
150 50.00 7,500
15-3-2004 - - - 50 40.00 2,000 100 50.00 5,000
50 50.00 2,500
Therefore, the value of stock of as on 31-3-2004 : 100 units @ Rs. 50.00 = Rs. 5,000.
STOCK LEDGER
Date Receipts Issues Balance
Units Price Amount Units Wt.Avg. Amount Units Value
Rate
01-1-2004 Opng. - - - - - Nil Nil
01-1-2004 100 30.00 3,000 - - - 100 3,000
15-1-2004 - - - 50 30.00 1,500 50 1,500
01-2-2004 200 40.00 8,000 - - - 250 9,500
Stock Valuation
Therefore, the value of stock of as on 31-3-2004 : 100 units @ Rs. 47.00 = Rs. 4,700.
Working Notes:
(1) Weighted Average Rate on 15-2-2004 = 1,500 + 8,000 = Rs. 38
250