Examples of LIFO

Examples of LIFO

Under the LIFO stock is valued as (last in First out). It means the stock purchase in last will be sol first. The concept is being explained in below example

Example of LIFO

Particulars	Units	Rate
Stock at 1. Jun,2012	400	50
Purchase July,2012	300	60
Purchase  Aug,2012	300	70
Sale Oct ,2012	300

Solution

1. Calculate Closing Stock units

Opening Stock	400
Purchase ( 300 + 300)	600
Sale	(300)
Closing Stock	700

2. Valuation under FIFO

Unit	Rate	Value
400	50	20,000
300	60	18,000
Total		38,000

In above example the stock came 300 units @ 70 was sold first and the remaining stock is 700 units is the stock at the start of year and purchased in July i.e. (400 + 300) respectively.