1. STORES LEDGER

The choice of inventory costing method is an important one for companies since consequence of the choice is apparent in both the balance sheet and the income statement. In periods of raising prices, companies choosing the income-reducing method of Last-in-First-out (LIFO) also leave the lower earlier prices in their inventory values.

This results in inventory values in the balance sheet that are based on the older prices, the LIFO method results in lower net incomes and also lower values in the current assets. The only advantage to choosing this method is the lower tax expenses based on the lower income. The American tax code requires the use of the LIFO method for financial reporting purposes if that method is used for tax purposes. When used for tax purposes, LIFO with its lower reported incomes correspondingly results in substantial tax savings for companies with large amounts of inventories, typically most large merchandising and manufacturing companies in the economy. With the understanding of these answer the below questions.

1. Problem:

From the following information , prepare stores ledger Account under LIFO(10 Marks)

2020 Particulars

March1 Received 600 Units at BD22 per unit

March10 Received 500 Units at BD 14 per unit

March15 Issued 400 Units

March20 Received 600 Units at BD28 per unit

March28 Received 200 Units at BD22 per unit

March31 Issued 300 unit.