Using the same data as in the FIFO illustration above, prepare a Stores Ledger Account under the Weighted Average Method (recomputing the average rate on every fresh receipt):
Jan 1: Opening stock 100 units @ ₹10
Jan 5: Purchased 200 units @ ₹12
Jan 10: Issued 150 units
Jan 15: P

Question

Using the same data as in the FIFO illustration above, prepare a Stores Ledger Account under the Weighted Average Method (recomputing the average rate on every fresh receipt):
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 Weighted Average Method, the issue rate is calculated by dividing the TOTAL VALUE of all material currently in stock by the TOTAL QUANTITY currently in stock — so, unlike the Simple Average method, a larger batch correctly influences the average rate more than a smaller one. This weighted rate is recalculated every time a fresh purchase is received, and applies to every issue made until the next receipt.

| Date | Receipt Qty | Receipt Rate (₹) | Receipt Amount (₹) | Issue Qty | Issue Rate (₹) | Issue Amount (₹) | Balance Qty | Balance Rate (₹) | Balance Amount (₹) |
|---|---|---|---|---|---|---|---|---|---|
| Jan 1 (Opening) | — | — | — | — | — | — | 100 | 10.00 | 1,000.00 |
| Jan 5 | 200 | 12 | 2,400 | — | — | — | 300 | 11.33 | 3,400.00 |
| Jan 10 | — | — | — | 150 | 11.33 | 1,700.00 | 150 | 11.33 | 1,700.00 |
| Jan 15 | 150 | 14 | 2,100 | — | — | — | 300 | 12.67 | 3,800.00 |
| Jan 20 | — | — | — | 200 | 12.67 | 2,533.33 | 100 | 12.67 | 1,266.67 |
| Jan 25 | 100 | 16 | 1,600 | — | — | — | 200 | 14.33 | 2,866.67 |
| Jan 28 | — | — | — | 100 | 14.33 | 1,433.33 | 100 | 14.33 | 1,433.33 |

**Working for each weighted rate (Total Value ÷ Total Quantity):**

- After Jan 5 receipt: (₹1,000 + ₹2,400) ÷ (100 + 200) = ₹3,400 ÷ 300 = **₹11.33 per unit** (approx.; exact value ₹34/3). Jan 10 issue = 150 × ₹11.33 ≈ ₹1,700 (using the more precise fraction, 150 × 34⁄3 = ₹1,700 exactly, since 300 units splits evenly into two lots of 150). Balance: 150 units, value = 3,400 − 1,700 = ₹1,700.
- After Jan 15 receipt: (₹1,700 + ₹2,100) ÷ (150 + 150) = ₹3,800 ÷ 300 = **₹12.67 per unit** (approx.; exact value ₹38/3). Jan 20 issue = 200 × 38⁄3 = ₹2,533.33. Balance: 100 units, value = 3,800 − 2,533.33 = ₹1,266.67.
- After Jan 25 receipt: (₹1,266.67 + ₹1,600) ÷ (100 + 100) = ₹2,866.67 ÷ 200 = **₹14.33 per unit** (approx.). Jan 28 issue = 100 × ₹14.33 ≈ ₹1,433.33. Balance: 100 units, value = 2,866.67 − 1,433.33 = ₹1,433.34 (≈ ₹1,433.33, the one-paisa difference being pure rounding)

Date	Receipt Qty	Receipt Rate (₹)	Receipt Amount (₹)	Issue Qty	Issue Rate (₹)	Issue Amount (₹)	Balance Qty	Balance Rate (₹)	Balance Amount (₹)
Jan 1 (Opening)	—	—	—	—	—	—	100	10.00	1,000.00
Jan 5	200	12	2,400	—	—	—	300	11.33	3,400.00
Jan 10	—	—	—	150	11.33	1,700.00	150	11.33	1,700.00
Jan 15	150	14	2,100	—	—	—	300	12.67	3,800.00
Jan 20	—	—	—	200	12.67	2,533.33	100	12.67	1,266.67
Jan 25	100	16	1,600	—	—	—	200	14.33	2,866.67
Jan 28	—	—	—	100	14.33	1,433.33	100	14.33	1,433.33

🎓Unlock everything free for 14 days

Unlock everything free for 14 days