consignment accounts
Shubham Banik (6 Points)
16 July 2018
i cannot understand the valuation of unsold stock methods in all problems .
1 Replies
Prakash Gehani
(Consultant & Teacher(Whatsapp 8718057907)
(1306 Points)
Replied 05 August 2018
Value of stock calculated by finding cost per unit( Total cost ÷ Total Qty) then such cost will be multiplied by no. of unsold units.
Total cost is sum of Purchase price of goods and expenses incurred upto godown( i.e. all expenses of consignor and direct expenses of consignee)
Then such cost and expenses is divided by appropriate base i.e total qty or remaining qty after loss.
In case of no loss or normal loss Purchase price & Expenses are divided by total qty or total qty - loss, because all expenses are incurred to purchase such qty of goods, but in case of abnormal loss which is generally happened in transit then consignee incur expense on remaining qty i.e. total qty -loss therefore consignee expenses will be divide by remaining qty and purchase price and consignor expenses will be divided by total qty.
You can use following formula:
In case of no loss:
Value of stock= ((Cost of goods sent on consignment+ Consignor expenses + Consignee Direct Expenses)
÷
Total Qty.) × unsold stock in qty
In case of normal loss:
Value of stock= ((Cost of goods sent on consignment+ Consignor expenses + Consignee Direct Expenses)
÷
(Total Qty. - Normal loss)) × unsold stock in qty
In case of abnormal loss:
Value of stock= ((Cost of goods sent on consignment+ Consignor expenses)÷ total qty.
+
Consignee Direct Expenses ÷( Total Qty. - Abnormal Loss in qty)) × unsold stock in qty
But if abnormal loss happened at consignees godown then formula will be:
Value of stock= ((Cost of goods sent on consignment+ Consignor expenses + Consignee Direct Expenses)
÷
Total Qty.) × unsold stock in qty
(Similar to no loss)
Consignee Direct Expenses: All expenses incurred upto godown eg. freight, octroi, carriage etc.
Total cost is sum of Purchase price of goods and expenses incurred upto godown( i.e. all expenses of consignor and direct expenses of consignee)
Then such cost and expenses is divided by appropriate base i.e total qty or remaining qty after loss.
In case of no loss or normal loss Purchase price & Expenses are divided by total qty or total qty - loss, because all expenses are incurred to purchase such qty of goods, but in case of abnormal loss which is generally happened in transit then consignee incur expense on remaining qty i.e. total qty -loss therefore consignee expenses will be divide by remaining qty and purchase price and consignor expenses will be divided by total qty.
You can use following formula:
In case of no loss:
Value of stock= ((Cost of goods sent on consignment+ Consignor expenses + Consignee Direct Expenses)
÷
Total Qty.) × unsold stock in qty
In case of normal loss:
Value of stock= ((Cost of goods sent on consignment+ Consignor expenses + Consignee Direct Expenses)
÷
(Total Qty. - Normal loss)) × unsold stock in qty
In case of abnormal loss:
Value of stock= ((Cost of goods sent on consignment+ Consignor expenses)÷ total qty.
+
Consignee Direct Expenses ÷( Total Qty. - Abnormal Loss in qty)) × unsold stock in qty
But if abnormal loss happened at consignees godown then formula will be:
Value of stock= ((Cost of goods sent on consignment+ Consignor expenses + Consignee Direct Expenses)
÷
Total Qty.) × unsold stock in qty
(Similar to no loss)
Consignee Direct Expenses: All expenses incurred upto godown eg. freight, octroi, carriage etc.
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