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| Covering Chapters |
1. |
Cost Sheet |
9. |
Partnership Dissolution and Insolvency |
2. |
Inventory (Stock) Valuation |
10. |
Shares |
3. |
Consignment |
11. |
Debentures |
4. |
Joint Venture |
12. |
Final Accounts of Company and Application of Schedule |
5. |
Self Balancing and Sectional Balancing System |
13. |
Funds Flow Statement |
6. |
Partnership Fundamental |
14. |
Cash Flow Statement |
7. |
Partnership Admission |
15. |
Ratio Analysis |
8. |
Partnership Retirement and Death |
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| Questions |
| Question 17 |
Time :25 mins
Marks [12] |
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| Rathi Cycle Industries, Indore appointed Maheshwari Cycle Mart, Raipur as its selling agents on the following terms : |
| (a) |
Goods will be sold at invoice price or over |
| (b) |
Maheshwari Cycle Mart, Raipur is to be entitled to a commission at 7.5% on the invoice price and 20% on any surplus realised. |
| (c) |
The consignor to draw on the agent at 30 days for 75% of the invoice price. |
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| On 1st August, 1999, 500 cycles were consigned to the agent, each cycle costing Rs 128 including freight and invoiced at Rs 160 each. |
| Maheshwari Cycle Mart met its acceptance on the due date sold 410 cycles at an average price Rs 186 each upto 31st December, 1999. The selling expenses being Rs 1,250 and remitted the amount due by a bank draft. Ten of the unsold bicycles were defective and to be valued at 50% less, while repairs to 5 bicycles are estimated to Rs 60 to put them in saleable condition. |
| From the above transactions prepare Consignment A/c and
Consignee A/c. |
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| Solutions Tips and Guidelines |
| Solution 17 |
Time :25 mins
Marks [12] |
In the Books of Rathi Cycle Industries
Raipur Consignment Account |
| Dr. Cr. |
Particulars |
Amount |
Particulars |
Amount |
| To Googs send on consignment A/c (500 x Rs 160) |
80,000 |
By Goods send on consignment [WN 2] |
16,000 |
| To Maheshwari Cycle Mart |
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By Maheshwari Cycle Mart sales |
76,260 |
| (1) Selling expenses |
1,250 |
By consignment Stock A/c [WN 1] |
13,380 |
| (2) Commission |
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| normal commission |
4,920 |
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| over-riding commission |
2,123 |
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| To Stock Reserve [WN 3] |
2,560 |
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| (80 x 32) |
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| To Profit on consignment |
14,778 |
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Total |
1,05,640 |
Total |
1,05,640 |
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Maheshwari Cycle Mart |
| Dr. Cr. |
Particulars |
Amount |
Particulars |
Amount |
| To Raipur consignment A/c |
76,260 |
By B/R A/c (75% of invoice Price) |
60,000 |
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By Raipur consignment A/c (expenses) |
1,250 |
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(Commission) |
7,052 |
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by Bank A/c |
7,958 |
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76,260 |
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76,260 |
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| Working Notes : |
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| (1) |
Valuation of consignment stock : |
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Total cycles consignment - cycles sold = Consignment Stock. |
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500 - 410 = 90 (In this 10 cycles are defective and balance 80 are fresh)
Fresh stock = 80 x 160 = 12800
Defective stock = 10 x 64 = 640
Total 13,440
Less: Repairs to be made 60
Net stock 13,380 |
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| (2) |
Sometimes consignor sents invoice to consignee at a price higher than the cost such a price is also called loaded price. In such a case first entry for sending goods by consignor to consignee will be passed at invoice price (Cost + Loading) |
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In this question Inovice Price is 160 hence we will pass Ist entry by 500 x 160 = 80,000 and then we will reverse entry by difference of cost and invoice in the credit side of consignment a/c |
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500 x (160 - 128) = 500 x 32 = 16000 |
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