Using the same data as in the FIFO illustration above, prepare a Stores Ledger Account under the LIFO (Last-in-First-out) Method:
Jan 1: Opening stock 100 units @ ₹10
Jan 5: Purchased 200 units @ ₹12
Jan 10: Issued 150 units
Jan 15: Purchased 150 units @ ₹14
Jan 20: Issued 200 un

Question

Using the same data as in the FIFO illustration above, prepare a Stores Ledger Account under the LIFO (Last-in-First-out) Method:
Jan 1: Opening stock 100 units @ ₹10
Jan 5: Purchased 200 units @ ₹12
Jan 10: Issued 150 units
Jan 15: Purchased 150 units @ ₹14
Jan 20: Issued 200 units
Jan 25: Purchased 100 units @ ₹16
Jan 28: Issued 100 units

Accepted Answer

Under the LIFO (Last-in-First-out) Method, it is assumed that whichever lot of material was received LAST (most recently) is issued FIRST — the exact mirror image of FIFO. Every issue is priced starting from the newest layer of stock still remaining.

| Date | Receipt Qty | Receipt Rate (₹) | Receipt Amount (₹) | Issue Qty | Issue Rate (₹) | Issue Amount (₹) | Balance Qty | Balance Rate (₹) | Balance Amount (₹) |
|---|---|---|---|---|---|---|---|---|---|
| Jan 1 (Opening) | — | — | — | — | — | — | 100 | 10 | 1,000 |
| Jan 5 | 200 | 12 | 2,400 | — | — | — | 100 + 200 | 10 / 12 | 3,400 |
| Jan 10 | — | — | — | 150 | (150@12) | 1,800 | 100 + 50 | 10 / 12 | 1,600 |
| Jan 15 | 150 | 14 | 2,100 | — | — | — | 100 + 50 + 150 | 10 / 12 / 14 | 3,700 |
| Jan 20 | — | — | — | 200 | (150@14 + 50@12) | 2,700 | 100 | 10 | 1,000 |
| Jan 25 | 100 | 16 | 1,600 | — | — | — | 100 + 100 | 10 / 16 | 2,600 |
| Jan 28 | — | — | — | 100 | (100@16) | 1,600 | 100 | 10 | 1,000 |

**Working for each issue:**

- Jan 10 (issue 150 units): the most recent lot in stock is the Jan 5 lot of 200 units @ ₹12, which is large enough to cover the whole issue on its own. Issue cost = 150 × ₹12 = **₹1,800**. Balance after this issue: the original 100 units @ ₹10, plus 50 units remaining from the Jan 5 lot @ ₹12 = ₹1,600.
- Jan 20 (issue 200 units): the most recent lot is now the Jan 15 lot of 150 units @ ₹14 — fully consumed (= ₹2,100) — and since 50 units are still needed, the next-most-recent layer, the remaining 50 units @ ₹12 from Jan 5, is also used (= ₹600). Issue cost = 2,100 + 600 = **₹2,700**. Balance after this issue: only the original opening 100 units @ ₹10 = ₹1,000 remain (both later lots are now fully used up).
- Jan 28 (issue 100 units): the most recent lot is the entire Jan 25 lot of 100 units @ ₹16. Issue cost = **₹1,600**. Balance after this issue: the original opening 100 units @ ₹10 = ₹1,000, untouched throughout. …

Date	Receipt Qty	Receipt Rate (₹)	Receipt Amount (₹)	Issue Qty	Issue Rate (₹)	Issue Amount (₹)	Balance Qty	Balance Rate (₹)	Balance Amount (₹)
Jan 1 (Opening)	—	—	—	—	—	—	100	10	1,000
Jan 5	200	12	2,400	—	—	—	100 + 200	10 / 12	3,400
Jan 10	—	—	—	150	(150@12)	1,800	100 + 50	10 / 12	1,600
Jan 15	150	14	2,100	—	—	—	100 + 50 + 150	10 / 12 / 14	3,700
Jan 20	—	—	—	200	(150@14 + 50@12)	2,700	100	10	1,000
Jan 25	100	16	1,600	—	—	—	100 + 100	10 / 16	2,600
Jan 28	—	—	—	100	(100@16)	1,600	100	10	1,000

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