ASSIGNMENT MATERIAL 3

Date Details Amount (Rs.)

07-07-00 Amount paid to supplier 700,000,000
07-07-00 Transportation charges on purchase 50,000
25-7-00 Amount paid to supplier 800,000,000
25-7-00 Carriage outward 70,000
25-7-00 Electricity charges of office 10,000
25-7-00 Telephone charges (office) 5,000
27-7-00 Godown rent paid 25,000
30-7-00 Accountant's salary 17,000
30-7-00 Insurance charges of goods in godown 13,000
30-7-00 Mark up on loan for acquisition of inventories 15,000
31-7-00 Salary of godown keeper 4,000

Note
Accountant is also a member of purchase committee and 10% of time is spent for odering of goods
and their inspection at the time of purchase.

Required
From the following data work out total cost of inventories acquired during the month

SOLUTION

Cost of Inventories

Amount (Rs.)
07-07-00 Amount paid to supplier 700,000,000
07-07-00 Transportation charges on purchase 50,000
25-7-00 Amount paid to supplier 800,000,000
30-7-00 Accountant's salary (17,000 X 0.10) 1,700
1,500,051,700

Carriage outwards is not part of the cost of goods sold . It should be reported on the income statement
as an operating expense wheras, Carriage inwards is considered to be part of the cost of the items
purchased.