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Stock as Per Books and Stock as Per Physical Verification

Stock as per books may differ from physical verification due to the following reasons:
  • Goods sold and recorded in the books but not delivered or vice versa
  • Goods purchased and recorded in the books but not received or vice versa
  • Return inwards received but not recorded in the books of accounts or vice versa
  • Return outwards dispatched but not recorded in the books or vice versa

Illustration 8

 

In A Ltd., periodic inventory of stock on hand is taken when the books are closed at the end of each month. The following details are available:

  • Sales ₹ 4,72,500
  • General Expenses ₹ 12,500
  • Opening Stock is valued 50,000 units at ₹ 3 per unit = ₹ 1,50,000
  • Purchases:
    • 0 2-09-2012 1,00,000 at ₹ 2.85 p.u
    • 0 3-09-2012 50,000 at ₹ 3.03 p.u
  • Sales:
     
    23-09-2012 1,35,000 units
  • Closing inventory = 65,000 units

From the above details:

  • Compute the value of inventory on Sep 30th using FIFO
  • Compute COGS using FIFO
  • Compute Profit and loss using FIFO
  • Compute the value of inventory on Sep 30th using Weighted average method
  • Compute COGS using Weighted Average
  • Compute Profit and loss using Weighted average method
  • Compute the value of inventory on Sep 30th using LIFO
  • Compute COGS using LIFO
  • Compute Profit and loss using LIFO

Solution:

  1. Stock ledger under FIFO method (Using Perpetual system)


Value of inventory on September 30th = ₹ 1,94,250

 

Issues = Balance - Closing stock = 2,00,000 - 65,000 = 1,35,000

  1. COGS = Opening stock + Purchases - Closing stock
     
    = ₹ 1,50,000 + ₹ 4,36,500 - ₹ 1,94,250
     
    = ₹ 3,92,250
  2. Profit = Sales - COGS - Expenses
     
    = ₹ 4,72,500 - ₹ 3,92,250 - ₹ 12,500
     
    = ₹ 67,750
     
  3. Stock ledger under weighted average method (Using Perpetual system)


Value of inventory on September 30th = ₹ 1,90,613

  1. COGS = Opening stock + Purchases - Closing stock
     
    = (₹ 1,50,000 + ₹ 4,36,500) - ₹ 1,90,613
     
    = ₹ 3,95,887.
     
  2. Profit = Sales - COGS - Expenses
    = ₹ 4,72,500 - ₹ 3,95,887 - ₹ 12,500
     
    = ₹ 64,113.
  3. Stock ledger under LIFO method (Using Perpetual system)

Value of inventory on September 30th = ₹ 1,92,750

  1. COGS = Opening stock + Purchases - Closing stock
     
    = ₹ 1,50,000 + ₹ 4,36,500 - ₹ 1,92,750
     
    = ₹ 3,93,750
     
  2. Profit = Sales - COGS - Expenses
     
    = ₹ 4,72,500 - ₹ 3,93,750 - ₹ 12,500
     
    = ₹ 66,250




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