Store Ledger

❖ Definition of Store ledger and Bin card

Store ledger: The store ledger is usually of the loose–leaf or card type and each account
represent an item of material. It is kept in the costing Department. This ledger is maintained in
order to ensure correct stores accounting.

Bin Cards: Bin Cards are maintained by the storekeeper in the stores for each class of materials.

❖ Distinguish between Store ledger and Bin card

Sl No Stores ledger Bin card

1 A record of both quantities and A record of quantities only.
values.
2 Maintained by a clerk in the Maintained by the store keeper in
costing department the stores
3 Always posted after the Normally posted before the
transaction transaction take place
4 Transaction may be summarized Each transaction is individually
and then posted posted
5 It is not a basic accounting record It is one of the basic accounting
records.

❖ What are the various methods for valuing materials issued?

The various methods which are generally used for valuing materials issued from stores may be
grouped as follows:
a) Cost price methods
i) Specific price
ii) First in First Out (FIFO)
iii) Last in First Out (LIFO)
iv) Base stock
b) Average price methods
i) Simple Average
ii) Weighted Average
iii) Periodic simple average
iv) Periodic weighted Average
v) Moving Simple Average

c) Market Price Methods

i) Replacement Price
ii) Realizable Price

d) Standard Price Methods:

i) Current Standard Price
ii) Basic Standard Price
 Exercise and Solution:
You are one of the accounts executive of store department to ROYAL Company Ltd. You are supplied with
the following:

January 1 Opening Balance 100 units @ Tk 10 per unit

January 5 Purchased 200 units @ Tk 12 per unit
January 11 Issued to A Department 200 units
January 17 Purchased 300 units @ Tk 14 per unit
January 20 Return to supplier 50 units
January 27 Issued to B Department 200 units
January 29 Return from production dept. B 50 units
January 30 Transferred from A to B 50 units

On 21st January, the stock verifier found 50 units shortage in stock and put a note accordingly.
Construct a store ledger using----
1) FIFO Method
2) LIFO Method
3) Simple Average Method
4) Weighted Average Method

Solution: 01

Material:------- ROYAL Company Ltd Maximum Level :-----

Size :------- Store Ledger Minimum Level :-----
Code :------- Method-FIFO Re- Order Level :-----
Location: ------

Date Particulars Purchase / Received Sale/ Issued Balance

Units Rate Amount Units Rate Amount Units Rate Amount
Jan-1 Opening Balance 100 10 1000
Jan-5 Purchased 200 12 2400 100 10 1000
200 12 2400
Jan-11 Issued to Department A 100 10 1000 100 12 1200
100 12 1200
Jan-17 Purchased 300 14 4200 100 12 1200
300 14 4200
Jan-20 Returned to supplier 50 14 700 100 12 1200
250 14 3500
Jan-21 Shortage 50 12 600 50 12 600
250 14 3500
Jan-27 Issued to B 50 12 600 100 14 1400
150 14 2100
Jan-29 Return from production 50 14 700 150 14 2100
Dept. B
Jan-31 Closing Balance 150 14 2100
Solution: 02

Material:------- ROYAL Company Ltd Maximum Level :-----

Size :------- Store Ledger Minimum Level :-----
Code :------- Method-LIFO Re- Order Level :-----
Location: ------

Date Particulars Purchase / Received Sale/ Issued Balance

Units Rate Amount Units Rate Amount Units Rate Amount
Jan-1 Opening Balance 100 10 1000
Jan-5 Purchased 200 12 2400 100 10 1000
200 12 2400
Jan-11 Issued to Department A 100 10 1000
200 12 2400
Jan-17 Purchased 300 14 4200 100 10 1000
300 14 4200
Jan-20 Returned to supplier 50 14 700 100 10 1000
250 14 3500
Jan-21 Shortage 50 10 500 50 10 500
250 14 3500
Jan-27 Issued to B 200 14 2800 50 10 500
50 14 700
Jan-29 Return from production 50 14 700 50 10 500
Dept. B 100 14 1400
Jan-31 Closing Balance 50 10 500
100 14 1400

Solution: 03

Material:------- ROYAL Company Ltd Maximum Level :-----

Size :------- Store Ledger Minimum Level :-----
Code :------- Method-Simple Average Method Re- Order Level :-----
Location: ------
Date Particulars Purchase / Received Sale/ Issued Balance
Units Rate Amount Units Rate Amount Units Rate Amount
Jan-1 Opening Balance 100 10 1000
Jan-5 Purchased 200 12 2400 100 10 1000
200 12 2400
Jan-11 Issued to Department A 100 12 1200
200 11 2200
Jan-17 Purchased 300 14 4200 100 12 1200
300 14 4200
Jan-20 Returned to supplier 50 14 700 100 12 1200
250 14 3500
Jan-21 Shortage 50 14 700 100 12 1200
200 14 2800
Jan-27 Issued to B 200 13 2600 100 14 1400

Jan-29 Return from production 50 13 650 100 14 1400

Dept. B 50 13 650
Jan-31 Closing Balance 100 14 1400
50 13 650
Note:
• Tk 10+12/ 2= Tk 11
• Tk 12+14/2= Tk 13
Solution: 04

Material:------- ROYAL Company Ltd Maximum Level :-----

Size :------- Store Ledger Minimum Level :-----
Code :------- Method-Weighted Average Method Re- Order Level :-----
Location: ------

Date Particulars Purchase / Received Sale/ Issued Balance

Units Rate Amount Units Rate Amount Units Rate Amount
Jan-1 Opening Balance 100 10 1000
Jan-5 Purchased 200 12 2400 300 11.33 3400

Jan-11 Issued to Department A 100 11.33 1133

200 11.33 2267
Jan-17 Purchased 300 14 4200 400 5333
13.33
Jan-20 Returned to supplier 50 14 700 350 13.24 4633
Jan-21 Shortage 50 14 700 300 13.11 3933

Jan-27 Issued to B 200 13.11 2622 100 13.11 1311

Jan-29 Return from production 50 13.11 656 150 1967

Dept. B
Jan-31 Closing Balance 150 1967

Note:
• Tk 3400/300= Tk 11.33
• Tk 3934/300= Tk 13.11