Question

Accounting for Consignment Transactions Ravi of Dharwad Consigned to Shiva of Raichur 200 bats costing Rs.100 each. Ravi paid Rs.600 towards freight and insurance and Rs.200 packing charges. Shiva received bats and paid Rs.200 godown rent, Rs.200 entry tax, Rs.400 advertisement and Rs.200 carriage outwards. Shiva sold 160 bats at an average price of Rs.150 each. Ascertain the value of closing stock​

Answer 1

Answer:

4,200

Explanation:

Consigner : Ravi

Consignee : Shiva

Goods sent on consignment

200 bats @ 100 each = 20,000

Consigner Ravi expense [ 800 ]

1. Freight and insurance = 600
2. Packing = 200

Consignee expense [ 1,000 ]

1. Rent = 200
2. Tax = 200
3. Advertisement = 400
4. Carriage on sale = 200

Sales proceed by Shiva

→ 160 bats @ 150 each = 24,000

Value of closing inventory

→ Inventory in hand = 40 [ 200 - 160 ]

→ 40 × 100 = 4,000

→ (+) Consigner expense = ⁴⁰/₂₀₀ × 800 = 160

→ (+) Consignee expense =  ⁴⁰/₂₀₀ × 200 = 40

Value of closing inventory = 4,200