Naveen of nagpur send out 1,000 boxes costing 1,00,000 to deepak of delhi at cost +20% consignor "s expenses were
Freight Rs6,000
Insurance Rs2,000
consignee expenses were as follow
Loading and unloading expenses Rs10,000
Salesman salary Rs6,000
commission 2% on gross sales
what will be the amount of profit if 3/4 goods sold by consignee at Rs1,00,000
A) Rs 5,500 B)Rs6500 C)Rs7,500 D)Rs3500
My answer for this question is 4500 but answer given in book is 3500
my answer is 5000
consignment account
add dr side = ip 120000 + consignor exp 8000+ consignees exp 16000 + commission 2000 = 146000
add cr side = sales 100000 + 1/4th unsold stock 31000 + loading 20000 = 151000
difference(profit) = 151000 - 146000 = 5000
calculation of unsold stock=
stock 1/4*1000*100=25000
consignor exp = 1/4*8000 = 2000
consignees exp = 1/4*16000 = 4000
total = (25000+2000+4000) = 31000
calculation of loading =
invoice price = 100000 + 20% on 100000 = 120000
cost price = 100000
loading = (120000-100000) = 20000
yea its 3500
calculation of unsold stock
cost of goods consigned = 100000
Add:- consignor expenses = 8000 (6000+2000)
Add :- consignee NRE expenses = 10000
______________
118000
______________
for 1/4th of goods = 118000*1/4 = 29500
consingment account dr side = 100000 (GSC ) + 8000 (consingnor exp ) +10000+6000 (consignee expense ) + 2000 (comissin 10000*2%) = 126000
conginment account cr side = 100000(total sales ) +29500 (unsold stock ) = 129500
129500 - 126000 = 3500/- answer
now expenses are 6000+2000+10000+6000+2000 = 26000. closing stock is 25000 + 1/4(6000+2000+10000) = 25000+4500 = 29500
so profit on consignment = 129500 - 126000 = 3500
the answer or profit wouldn't change because of loading. it is much easier to remove loading directly. however if you wish do the problem with loading it will be as follows
Consignment A/c
To goods sent on consignment1,20,000 By goods sent on consignment 20,000 (loading removed)
To Bank A/c(expenses)6000+2000 8000 By sales 1,00,000
To Deepak A/c10,000+6000+2000 18,000 By closing stock 34,500
To Stock Reserve A/c 5000
To P&L A/c 3500
working notes: closing stock valuation: 1/4(of invoice price + non-recurring expenses) = 1/4(1,20,000 + 18,000) = 34,500. stock reserve 1/4(loading) = 0.25 * 20,000 = 5000. the answer is same anyway;. Loading is just preparing accounts in a different way. profit and loss are not effected because of loading
calculation of unsold stock as per invocie price
cost of goods consigned = cost of goods consigned = 12000
Add:- consignor expenses = 8000 (6000+2000)
Add :- consignee NRE expenses = 10000
____________
138000
___________
for 1/4th of goods = 34500
valuation for unsold stock as per cost price
cost of goods consigned = 100000
Add:- consignor expenses = 8000 (6000+2000)
Add :- consignee NRE expenses = 10000
_________
118000
_________
for 1/4th goods = 118000*1/4 =29500
34500 -29500 = 5000 ( sotck reserve )
consingment a/c dr side = 120000(GSC)+ 8000 (consingnor exp ) +10000+6000 (consignee expense ) + 2000 (comissin 10000*2%) + 5000(stock reserve )=151000
conginment account cr side = 20000(Gsc) + 100000(total sales )+ 34500(unsold stock) =154500
154500 - 151000= 3500
Answer is 3,500 only..
Dr side of Consignemt account
To Goods sent on consignment = 1,20,000 + consignor expenses = 8000 + consignee expenses = 16000 + commission to consinee = 2000 + loading on closing stock ( 120000*1/4 - 100000*1/4 ) = 5000 Total dr side = 1,51,000
Cr side of consignment account
sales by consignee = 1,00,000 + loading on goods sold to consignee (1,20,000-1,00,000) = 20,000 +
closing stock [(120000*1/4) + (nonrecurring expenses consignor 8000 + consignee 10000)*1/4] = 34500 Total of Cr side = 1,54,500
Therefore profit = Cr side 154500 - Dr side 151000 = 3500
The answer in the book is correct i.e. it shd be 3500 only
2007-profit RS.50000
08-loss 20000(including loss by fire 30000)
09-profit 70000(including insurance claim rs.18000 nd int on investment nd dividends 8000)
calculate the value f goodwill.........ans is 66,000
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