As the name suggests, first item of inventory purchased will be the first item to be sold. This means that all the inventories are sold in the order of their purchase. Likewise, the end of an accounting pe- riod will depict those inventories as unsold which were recently purchased or produced. For example, as shown in below table, 1,200 items (300 from lot 3 and 900 from lot 4) remain unsold. Thus, the valuation of closing inventory of 1,200 items reflects the current market price. Lot No. Date Quantity (units) Per unit Price E) Price Paid () * 200 4 800 Stock Valuation 1 2 2 3 4 January 01, 2017 January 07, 2017 March 12, 2017 March 19, 2017 Total 400 500 4.5 3.5 4.20 1.800 1,750 2,520 6,870 600 200 units a 3.50 = 700 600 units @ 4.20 = 2,520 800 units = 33,220 1.700 c14 It should be noted that irrespective of the methods of accounting of inventories, whether periodic inventory system or perpetual inventory system is followed, we get the same cost of inventories us- ing FIFO method. 4.3.2 Format of Stock Ledger Account under FIFO Method The following is the format of Stock Ledger Account under FIFO method. Table 4.5 Stock Ledger Account or Stock Cards (under FIFO Method) Sales or issues of Date of Purchases Inventories Balance or Closing Inventories Transactions Quantity Prices Amount Quantity Prices Amount Quantity Prices Amount (1) (2) (3)=(21) 5 (5) (6)= (4 x 5) (7) (8) (9)=( 78) Opening date Balance bid Date of Units Per unit Units x Units sold Per unit Units Units lett Per unit Units left Purchase purchased price Per unit price sale price Per unit price Opening price Per unit price and Sales Purchases Sales) Total Total Purchases Cost of Goods Sold Cost of Closing Stock Example 1: Consider the following information to find value of stock (FIFO method) on 31 December 2016 and cost of goods sold; if the opening stock as on 01 January 2016 is 20 units @ 126 per unit Date Quantities Per unit Rate 100 January 02, 2016 February 03, 2016 April 10, 2016 June 15, 2016 July 20, 2016 August 31, 2016 November 30, 2016 Nature of Transactions Purchases Sales Issues Purchases Sales Purchases Issues 30 70 90 25 35 40 325 335 240 20 325 326 332