issues, until it is exhausted, and soon. If however, the quantity of issue is more than the quantity of the latest lot than earlier (lot) and its price will also be taken into consideration. o The cost of materials issued will be either nearer to and/or will reflect the current market price. o In case of falling prices profit tends to rise due to lower material cost. In the case of falling prices profit tends to raise due to lower material cost, yet the finished products appear to be more competitive and are at market price. o Over a period, the use of LIFO helps to level out the fluctuations in profits. o In the period of inflation LIFO will tend to show the correct profit and thus avoid paying undue taxes to some extent. O 525 The computations become complicated if too many receipts are there. o Companies having JIT system will face this problem more. In time of falling prices, there will be need for writing off stock value considerably to stick to the principle of stock valuation, i.e., the cost or the market price whichever is lower. This method of valuation of material is not acceptable to the income tax authorities. The closing stock is priced at a very old price which does not show the correct position of the business. The stock of material held on 1-4-2015 was 400 units @ 50 per unit. The following receipts and issues were recorded. You are required to prepare the Stores Ledger Account, showing how the values of issues would be calculated both through FIFO AND LIFO methods. 2-4-2015 Purchased 100 units @55 per unit 6-4-2015 Issued 300 units 10-4-2015 Purchased 600 units @ 60 per unit 13-4-2015 Issued 400 units 20-4-2015 Purchased 500 units @ 65 per unit. 25-4-2015 Issued 600 units