Question

Amount
Ramesh consigned 2,000 MT of chemicals at a cost of Rs 800 per MT to John, Ramesh paid freight and
insurance charges of Rs. 20,000. Of the above 500 MT of chemicals were destroyed by fire during transit.
john cleared the balance of 1,500 MT of chemicals and sold 1,000 MT at an average price of Rs. 1,000 per
MT. John incurred the following expenses. Godown Rent Rs. 5,000, Insurance Rs. 3,000, clearing Charges
Rs. 4,500. Insurance claim received against fire Rs. 4,00,000 after admitting the salvage value of Stock
destroyed by fire at Rs. 10,000. John was entitled to a commission of 10% on sales proceeds. John sends
the balance to Ramesh after adjusting his commission and expense out of the sales proceeds, Prepare
a Consignment Account and John's Account and John's Account in the books of Ramesh.
26
nt​

Answer 1

416,500 is the right answer

Answer 2

Answer:

The correct answer is 4,16,500.

Explanation:

To find the value of closing stock=?

FORMULA OF CLOSING STOCK :

Closing stock (in numbers) = Opening stock − Goods lost in transit − Goods sold

                                            = 2,000 − 500 − 1,000

                                            = 500

FORMULA OF COST PRICE OF CLOSING STOCK

Cost price of closing stock = total number of closing stock × Cost price per unit

                                     = 500 × 800

                                     = 4,00,000

Now, let us find the  consignor’s non recurring expenses in stock will be:

Consignor's non recurring expenses for closing stock

= 20,000 ×2,000500 = 5,000

Consignee's non recurring expenses for closing stock = (clearing charges × 1,500500) + salvage charge    

= (4,500 ×1500500) + 10,000 = 11,500

Hence, the value of closing stock, is as follows,

Value of closing stock = Cost price + Consignor expenses spent + Consignee expenses spent

                                     = 4,00,000 + 5,000 + 11,500 = 4,16,500

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