by Stores Ledger Account is a record-keeping document used to maintain a detailed account of materials received, issued, and their balances. It helps in tracking inventory levels, pricing materials, and ensuring efficient material control. The ledger records date-wise transactions and supports cost accounting by keeping an accurate record of material movement.
Format of Stores Ledger Account
A Stores Ledger typically includes the following columns:
| Date | Particulars | Receipt (Qty, Rate, Amount) | Issue (Qty, Rate, Amount) | Balance (Qty, Rate, Amount) |
|---|---|---|---|---|
| Jan 1 | Opening Stock | 100 @ ₹10 = ₹1,000 | – | 100 @ ₹10 = ₹1,000 |
| Jan 5 | Purchase | 50 @ ₹12 = ₹600 | – | 150 @ ₹10.67 = ₹1,600 |
| Jan 10 | Issue | – | 80 @ ₹10.67 = ₹853.60 | 70 @ ₹10.67 = ₹746.67 |
| Jan 15 | Purchase | 100 @ ₹11 = ₹1,100 | – | 170 @ ₹10.86 = ₹1,846.67 |
Steps in Preparing a Stores Ledger:
1. Recording Opening Stock
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The ledger starts with the opening balance of materials.
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This includes quantity, unit rate, and total value of the stock available.
2. Recording Material Receipts
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Each purchase of materials is recorded under the Receipt column.
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The unit cost is recorded, and the total cost is updated in the balance column.
3. Recording Material Issues
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When materials are issued to production or other departments, it is recorded in the Issue column.
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The cost per unit depends on the chosen pricing method (FIFO, LIFO, or Weighted Average).
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The balance is adjusted after each issue.
4. Calculating Closing Stock
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The balance column keeps track of remaining stock after each transaction.
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The final balance in the ledger at the end of a period becomes the closing stock.
Methods for Valuing Material Issues in Stores Ledger
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FIFO (First In, First Out): Oldest stock is issued first, ensuring materials are used in the order they arrive.
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LIFO (Last In, First Out): Latest stock is issued first, useful in inflationary conditions.
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Weighted Average: An average cost is calculated for all stock and applied uniformly to issues.
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Standard Price: A fixed price is used for all issues, simplifying accounting.
Importance of Stores Ledger:
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Accurate Material Control: Helps in tracking material usage and availability.
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Cost Control: Assists in budgeting and reducing material wastage.
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Facilitates Auditing: Serves as a financial record for stock verification.
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Prevents Stock-outs & Overstocks: Ensures optimal inventory levels.
