Question

ACCT 232 Case in issue of materials : Prepare a Stores Ledger Account from the following information adopting FIFO method of pricing of issues of materials. May 1, Opening balance 2,000 units @ SR 20. May 5, Received from suppliers 3,000 units its cost SR 80,000 with 10% discount and 1,800; 1,200 fright in expenses and insurance, respectively. . May 8, Issue 3,500 units to Department A. May 10, Material requested form suppliers 2,500 units @ SR 26. May 15, Received from suppliers 3,000 units @ SR 22. May 20, Issue 2,000 units to Department B. May 22, Returned 1,000 units from Department A which issue on May 8. Department B to May 23, 500 units transferred from Department A. May 25, Receive the required quantity on 10 May. May 28, Returned 500 units to supplies from quantity received on May 15. May 29, Issue 2,000 units to Department A. May 30, A sudden inventory of the store found that, there is 200-unit deficit which was considered a natural deficit.

  Method of solution is like this table

Answer 1

Stores Ledger (FIFO Method)

Date Particulars Purchases Issues Balance Unit Rate Amount Unit Rate Amount Unit Rate Amount May 1 Opening Balance 2000 20 40000 May 5 Received 3000 25 75000 2000 3000 20 25 40000 75000 May 8 Issued to Deptt.A 2000 1500 20 25 40000 37500 1500 25 37500 May 15 Received 3000 22 66000 1500 3000 25 22 37500 66000 May 20 Issued to Deptt.B 1500 500 25 20 37500 11000 2500 22 55000 May 25 Received 2500 26 65000 2500 2500 22 26 55000 65000 May 28 Return 500 22 11000 2000 2500 22 26 44000 65000 May 29 Issued to Deptt.A 2000 22 44000 2500 26 65000 May 30 Deficit 200 26 5200 2300 26 59800

Closing Stock as on May 30 = 2300units @ 26 = SR 59,800

Note:

1. Per unit cost for May 5 is calculated as Cost-Discount @ 10% + Freight & Insurance Expenses/ units

80000 - 8000=72000.  72000+1800+1200= 75000. 75000/ 3000 = SR15 per unit cost

2. Entry for May 23 will not appear in stores ledger as its directly transferred to Department A from B.