Question

Mr D of Delhi spend 1000 kg of oil at rupees 13 per kg to Mr S of Saharanpur. The consignor spent rupees 750 on cartage insurance and freight. On the way, due to leakage 50 kg of oil was spoilt Mr S took delivery of the consignment and spent rupees 500 on octroi and carriage. His selling expenses were rupees 400 on 800 kg of oil sold. Determine the value of stock.

Answer 1

Value of Stock should be Rs.2250

Explanation:

• Normal Loss refers to the loss of goods sent to the customer/buyer/purchaser due to some uncontrollable circumstances/situations such as Evaporation in case of volatile substances,leakage,breakage during transportation,sublimation of goods,etc.

• These kind of losses cannot be avoided and thus such inherent and unavoidable losses form part of Cost of goods.

• In the given case,Loss of 50kgs of Oil due to leakage will be considered as a Normal Loss and thus will be added to the Cost of goods sent to Mr.S of Saharanpur.

• Normal loss is not shown in the consignor account and thus,no journal entry is passed for the same.

• Value of stock can be calculated as follows,

       Value of stock =   Total Cost of goods sent

                                                                                      x Unsold goods

                        Total units of goods sent - Normal loss in units

        Value of Stock = $\dfrac{[1,000 \times 13 + 750+500]}{1,000 - 50} \times [950-800]$

                                  = Rs.2250

Answer 2

Answer:

Mr. Pankaj of Bangalore consigned 2000 kg goods costing Rs.20 per kg to Mr. Ranga of

Hyderabad on consignment basis. Pankaj paid freight Rs.1000, cartage Rs.450 and insurance Rs.

150. On the way 1/4th of the consignment was lost by accident and insurance admitted the claim

to the extent of 5000. The consignee sold 1400 kgs at Rs.40 per kg and incurred the following

expenses: Unloading charges Rs. 400, godown rent Rs.1000 and selling expenses Rs.600.