Question

Anand of Bangalore consigned to Raj of Pune, goods to be sold at invoice price which represents 125% of cost. Raj is entitled to a commission of 10% on sales at invoice price and 25% of any excess realised over invoice price. The expenses on freight and insurance incurred by Anand were Rs 12,000. The account sales received by Anand shows that Raj has effected sales amounting to Rs 1,20,000 in respect of 75% of the consignment. His selling expenses to be reimbursed were Rs 9,600. 10% of consignment goods of the value of Rs 15,000 were destroyed in fire at the Pune godown and the insurance company paid Rs 12,000 net of salvage. Raj remitted the balance in favour of Anand. You are required to prepare consignment account and the account of Raj in the books of Anand along with the necessary calculations.​

Answer 1

Explanation:

please check the attachment

Answer 2

Answer:

The value of inventories is calculated at cost and valued at the invoice price since the invoice price is provided.

Explanation:

How to estimate the value of inventories?

1. Calculation of Loading of goods sent on consignment:

Abnormal Loss at Invoice price = ₹ 15,000

Abnormal Loss as a percentage of total consignment = 10 %.

Hence the value of goods sent on consignment = ₹ 15,000 × 100 / 10

= ₹ 1,50,000.

Loading of goods sent on consignment = ₹ 1,50,000 × 25 / 125

= ₹ 30,000.

2. Calculation of abnormal loss ( 10 %) :

Abnormal Loss at Invoice price = ₹ 15,000

Abnormal Loss at cost = ₹ 15,000 × 100 / 125 = ₹ 12,000

Proportionate expenses of Anand ( 10 % of ₹ 12,000)

= ₹ 1,200 / ₹ 13,200

3. Calculation of closing Inventories (15%):

Anand's Basic Invoice price of consignment = ₹ 1,50,000$

Anand's expenses on consignment = ₹ 12,000 / ₹ 1,62,000 / ₹ 24,300

Value of closing Inventories = 15 % of ₹ 1,62,000 = ₹ 24,300

Loading in closing Inventories = ₹ 4,500(30,000 × 15 %)

4. Calculation of commission:

Invoice price of the goods sold = 75 % of ₹ 1,50,000 = ₹ 1,12,500

Excess of selling price over invoice price = (₹ 1,20,000 - ₹ 1,12,500)

= 7,500

Total commission = 10 % of ₹ 1,12,500 + 25 % of ₹ 7,500

= ₹ 11,250 + ₹ 1,875

= ₹ 13,125

The value of inventories is calculated at cost and valued at the invoice price since the invoice price is provided.

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