Dead Ball Penalty at End of 4th Down?

[Trent123]

I am a little league Dad who can't find an answer to the following situation

4th and 8, offense runs sweep left for 5 yards, runner goes out of bounds short of line to gain.
At conclusion of play, defender hits runner late, resulting in a personal foul.
Referee awards ball to defense on downs, change of possession, penalty enforced against the new team in possession, 1st and 25.

The Referee's explanation is that the offense surrendered the ball by failing to move the chains in 4 downs. The offending team is penalized but it does not affect their right to possession.

Any input would be appreciated.

Thanks -- Trent