Question

Bank overdraft is secured against hypothecation of stock. Bank overdraft
outstanding as on 31.3.2019 has been considered as 80% of real value of stock
(deducting 20% as margin) and after adjusting the marginal value 80% of the same
has been allowed to draw as an overdraft.
(bank overdraft as per trial balance=80000)

please explain in detail​

Answer 1

Answer:

Explanation : Here the bank overdraft is equal to 80 % of the cost price of stock and the stock is represented at marginal value .. And the marginal value is deducted 20 % which is equal to the cost price of stock ,. So the equation is X - X * 20 % = cost value ( here X is marginal value ) ...... Or alternatively the marginal value is equal to 80 % of the same i.e. cost price of the stock so X * 80 % = cost value and the cost value * 80 % = bank overdraft .