Celebrate Freedom with 10% OFF on CAclubindia Pro Membership. Subscribe Now!

Valuation of good applying FIFO

232 views

Save Share

Bhargav Nirmal

107 Points Posted on 20 April 2020

Applying FIFO
1-4 goog purchase 90 unit @ 10
2-4 good purchase 100 unit @ 11
4-4 good sold 190 unit @ 14
6-4 good purchase 50 unit @ 9
8-4 good return by customer 20 unit
9-4 good sale 10 unit @ 14
10 unit sold from which date 2-4 , 6-4 ?

Replies (5)

Quick Summary

This discussion explores the valuation of goods using the First-In, First-Out (FIFO) inventory method. It walks through a scenario involving multiple purchases, sales, and customer returns, illustrating how to track inventory costs. The core principle is that the oldest inventory is assumed to be sold first, and the impact of returned goods, especially if damaged, on the final valuation is considered.

yasaswi gomes

My grammar is 💯 good I

7306 Points Posted on 20 April 2020

FIFO- First purchased inventory will be first processed and sold first. So 190 purchases- 190 sales. 20 units returned because they are faulty. Next new purchases is on 6-4 and the 10 units were sold from 6-4.

Bhargav Nirmal

107 Points Posted on 20 April 2020

We are received good on date 8-4 from customer ( i.e good return) & that good we purchased at 2-4 so why from 6-4

yasaswi gomes

My grammar is 💯 good I

7306 Points Posted on 20 April 2020

8-4 does sales returns are for 4-4 goods sold and that is the only date on which sales occurred. Once inventory is returned, it is written off if it is badly damaged. Since, no additional information is given, we must consider it as badly damaged goods. So, 9-4 Sales is from 6-4 Purchases.