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360. Invoice price was calculated after adding 20% profit on cost price. Anuj incurred the following expenses at the time of dispatching the goods: Freight Insurance on goods sent Rs. 3,000 Rs. 12,000
Biren is entitled to get general commission-10% and Del credere commission-5%. On 31st March, 2013 Biren sent an Account Sales and a Bank draft for the payment due from him. According to the Account Sales: 1) 2) 3) 4) 50 FM Radios were totally damaged in transit and the insurance company admitted the claim of Rs. 10,800. 500 FM Radios were sold for cash, each at Rs. 420. 200 FM Radios were sold on credit to Chetan, each at Rs. 450. Expenses incurred by Biren: Clearing charges Rs. 2,375, Godown Rent Rs. 5,100, and Selling and Packing expenses Rs. 1,800. Chetan was declared insolvent, and Biren was able to recover only 90% of the amount due from him.
5)
Prepare Baroda Consignment Account in the books of Anuj, and Anujs (consignors) Account in the books of Biren (consignee) . Show necessary workings and calculations as a part of your answer. Que.2 Anuj and Biren commenced business in joint venture on the condition that they will share the profit or loss in the ratio of 2:1. From the following information prepare Joint venture account in books of Biren and Anujs Account in books of Biren. Anuj Purchased goods worth Rs. 93,000 and supplied it to Biren for joint venture. Anuj paid Rs. 1,800 for carriage on goods supplied. Biren set aside goods worth Rs. 60,000 from his personal stock for the purpose of sale under joint venture. He paid Rs. 4,200 for advertising expenses. Anuj drew a bill on Biren of Rs. 30,000, which was duly accepted by Biren. Biren sold goods worth Rs. 45,000 for Rs. 63,000. Moreover some more goods worth Rs. 90,000 were sold at a profit of 30% on cost price. Remaining goods were left unsold. This stock was taken over by Biren at a price arrived at after adding 1/3rd profit to the original cost price. In the end, Biren sent a bank draft for the balance, to Anuj.
Suggested answers
Que. 4
In the books of Anuj ( Consignor) Baroda Consignment A/c Particulars To Goods sent on consignment A/c (Invoice price 1000 units x 360 Rs.) To Cash/bank A/c -Consignor's expenses Freight 3,000 Insurance premium 12,000 To Biren's Account- Consginee's Exps Clearing charges 2,375 Godown Rent 5,100 Packing expenses 1,800 To Biren's Account - Consginee's Comm General 300,000 x 10% = 30,000 Del credere 90,000 x 5% = 4,500 34,500 By Consignment Stock A/c (WN #1)
To Consignment Stock reserve A/c (diff.) Adjustment /profit (250 FM Radios x 60)
Debit (Rs.)
Particulars
Credit (Rs.)
60,000
By Insurance Co. A/c (Claim admitted by ins. Co.) 15,000 By Gen. P & L A/c (WN # 2) (abnormal loss amount) By Biren's A/c - Sales Cash 500 Radios x 420 Rs.= 210,000 9,275 Credit 200 x 450 Rs. = 90,000
10,800 4,950
3,00,000
94,375
15,000
36,350
470,125 470,125
Biren's (Consignee) Account Particulars To Consignment A/c - Sales Cash 500 Radios x 420 Rs.= 210,000 Credit 200 x 450 Rs. = 90,000
Debit (Rs.)
Particulars
Credit (Rs.)
9,275 34,500
2,56,225 3,00,000
3,00,000
Goods sent on Consignment Account Particulars To Consignment Account -diff. To Trading Account
Debit (Rs.) 60,000
Credit (Rs.)
3,60,000 3,60,000
3,00,000 3,60,000
In the books of 'Biren ' (Consignee) Anuj's (Consignor) Account Particulars To cash / bank A/c - Expenses By Commission Income A/c commission
By Bank A/c (bank draft sent to consignor)
Debit (Rs.)
Particulars By Cash/bank A/c - sales 9,275 by Consignment Debtors A/c 34,500 2,56,225 3,00,000
Credit (Rs.)
210,000 90,000
3,00,000
Working Note # 1
Valuation of closing stock (1000 sent -700 sold - 50 abnormal loss = 250 unsold) Original cost 250 units x 300 Rs. Add: Consignor's prop. exps. (1000-15000:250-?) (only Non-recurring expenses to be considered Add: Consignee's prop. exps. (950-2375:250-?) [Godown rent (recurring exps.) and packing exps.(selling exps.) not to be considered] Cost Price of Closing Stock Add: profit / Diff. between invoice and cost (130 units x 400) Invoice price of closing stock Journal Entry Consignment stock A/c dr (invoice price) To Consignment A/c Consignment A/c dr. (Profit) To Stock reserve A/c 75,000 3,750 625
Que.2
In the books of Biren
To Anujs A/c - Expense To Purchase A/c To Cash/bank A/c Advertise Expense Profit (2:1) To Anujs A/c his share - 30,000 To P & L A/c Birens Share - 15,000
45,000 204000
204000
Anuj's A/c
Particulars To Bills payable A/c Amount Particulars 30,000 Joint venture A/c goods purchased By joint venture A/c - exp To bank A/c - bank drat 94,800 By Joint venture A/c - profit 30,000 Amount 93,000 1,800
124,800
124,800