Question

What is Receipts and Payments Account? What are its characteristics?
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. A of Jaipur consigns goods to B of Surat to be sold at or above invoice price. B
is entitled to get a commission of 8% on sales at invoice price plus 25% of any
surplus price realized. B accepted a bill of exchange drawn by A amounting to
50% of the invoice price as security.
In the year 2018-19 goods consigned by A were invoiced at 32,50,000. These
goods cost to A 2,00,000 (including freight). Sales made by B during the year
amounted to 32,35,000. At the end of year goods unsold with B represented an
invoice value of 60,000. During the year, A had received from B 340,000 by
bank drafts, certain remittances being in transit on 31st March, 2019. Prepare
necessary ledger accounts in the books of both the parties. Also show how the
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consignment stock will appear in the Balance Sheet.​

Answer 1

Explanation:

It starts with beginning cash and bank balance and ends with ending cash and bank balance. This account shows cash transactions of both capital and revenue nature. Mostly it shows a debit balance. In the exceptional case of overdraft balance, its net balance may be credit.