18 VOYAGE ACCOUNTS — Shipping companies carry goods from one place to another, Some companies carry pas- sogers also in addition to goods from one place te aetna ecayicaien eae hasan ote f ere “ ae cosas for its each specified voyage. Shipping companies prepare voyage Voyage account indicates the result of a ship voyage. It is prepared like profit and loss seount. Both outward and return journey of a ship are covered in each voyage.” DEBIT SIDE OF VOYAGE ACCOUNT Yoyage account is debited mostly with following items 1. Bunker Cost. Bunker here means the place in the ship where Fuel is kept. These days ships are driven by diesel oil, etc., therefore the place, where previously Fuel was kept, is now used for keeping diesel etc. Expenses on petrol, oil, etc., whatever is used during the period of voyage, are recorded in the debit side of voyage account. . Port Charges. Port is used by the shipping companies for loading and unloading of goods, and parking of ship, hence the charges paid for these purposes are known as port charges. 3. Depreciation. Depreciation of the ship for the period of voyage is calculated and recorded. 4, Insurance. Insurance charges are recorded in the debit side of voyage account. They are calculated on the period of voyage. 5. Brokerage is a type of commission which is paid to them who bring business for the shipping companies. They are called charterer’s agent. These brokers establish a contact between the shipping companies and those whose goods are taken by shipping com- panies from one place to another. 6. Stevendoring Charges. The expenses which are incurred in loading of goods on the ship and unloading of goods from the ships are known as stevendoring charges. 7. Annual standing charges. Annual standing charges are apportioned in the ratio of the period of the concerned voyage and the whole year. That portion of standing charges which relate to the period of voyage is recorded in the debit side of voyage account. 8. Salaries and wages of the crew, captain and other staff are recorded in the debit side of the voyage account. 9. Agency fees. 10. Harbour charges. fete é 11. Address Commission. Address commission is one which is payable to the charterer. It is paid to such persons who procure freight for the ship. 12. Freight insurance. : pee a 13. Manager’s Commission. Sometimes commission is paid to the managers on freights earned. CREDIT SIDE OF VOYAGE ACCOUNT Following items are recorded in the credit side of voyage account : 1, Freight. The amount which is charged by the shipping company for taking goods or cargo to another is called freight. It is an income of shipping company, hence ‘of voyage account.536 FINANCIAL ACCOUNTING 2. Primage. Shipping company charges an extra amount in addition to freight from those whose goods are carried by it in order to take their goods safely. This amounts calculated at a certain percentage over freight. In the olden times this primage was paid to the captain of the ship and was distributed amongst the employees of the ship, but now it is kept by the shipping company itself. It is also an income of shipping company. 3. Voyage-in-progress. Voyage-in-progress means that both outward and return journies of the ship are not complete. If outward journey is complete but return journey is incomplete, then the expenditure on outward journey and a portion of return journey is called voyage-in-progress and itis carried forward. Suppose total expenses of the voyage are 60,000, outward journey is complete hence ® 30,000 are for outward journey, return 30,000 x 2 3 ‘Total amount of expenditure for voyage-in-progress comes to % 30,000 + % 20,000 = % 50,000. This amount is carried forward. 4, Address Commission. As has already been pointed out that this commission is paid to the charterer, it is paid for procuring freight for the ship. It is calculated at a certain percentage on freight and is recorded in the debit side of voyage account but when voyage is incomplete, the amount of address commission is carried forward and hence recorded in the credit side of voyage account. 5. Passage money. Shipping companies carry passengers also along with cargo, the fare received from passenger is income of shipping companies. This is called passage money. It is recorded in the credit side of voyage account. 6. Bar sales and Saloon incomes are also recorded in the credit side of voyage account. 7. Closing stock of stores, provisions, coal and fuel are recorded in the credit side of voyage account. BALANCING OF VOYAGE ACCOUNT Excess of credit side of voyage account over its debit side is profit on the voyage. Ex journey is incomplete hence or % 20,000 are for incomplete return journey, ss of debit side of voyage account over its credit side is loss on the voyage. This profit or loss is transferred to general profit and loss account of the shipping company. VOYAGE ACCOUNT AND PROFIT & LOSS ACCOUNT Voyage account and profit and loss account are prepared on the same principles. Profit and loss account is ordinarily prepared for the accounting period which is mostly one year, but voyage account is mostly prepared for each voyage of the ship namely outward journey and return journey of the ship in one account called voyage account. Some shipping companies prepare Yoyage account periodically also. In voyage account depreciation is charged on the basis of the period of journey while in profit and loss account it is not so. In case of incomplete journey, the expenses incurred on unfinished voyage are carried forward in case of voyage account, such situation does not arise in case of profit and loss account. Mlustration 1 it on S1st Dec, 2015, This ship carried jute while going to Mumbai and returned with ced paet Mibiceminknaeimigioniis ee two months z 28,000, Freight earned for return journey 90,000 and for outward journey & 1,50,000- P.M. Ship commenced its voyage from Kolkata to Mumbai and back on Ist Nov., 2015 and completed Diesel & 60,000, Salaries % 80,000, Port charges % 10,000, Stores purchased ® 8,000, Depreciation for Primage is 10% of freight. Prepare voyage account. 1 P.M. SHIP Voyage Account (from Ast Nov. to 31st Dec., 2015)7 VOYAGE ACCOUNTS 837 ; {Stores Parchased | goDepreciation Epes + Primage 10% 9,000 | 99,000 Insurance 8,000 ; Bp & Ll (Net Profit) | 70%000' | 2,64,000 |2,64,000 x2 A a = 8,000 because journey is for two months. + ghis is balancing amount. slustration 2 Jal Pratap commenced a voyage on 1st October, 2015 from Mumbai to London and back. Th Ist October, jumbai to London an 1e voyage ascompleted on 30th Nov., 2015. It carried a consignment of tea on its outward journey and of machinery ____ gaits return journey. The ship was insured and the annual premium was ¥ 24,000. Prepare Voyage Account fom the following particulars z ) Freight earned (outward) 1,00,000 1 Creditors 10,000 Freight earned (Inward) 70,000 1 Port dues 5,000 Building 30,000 ; Bunker Cost 25,000 , Wages & Salary 55,000 Sundry Expenses 16,000 Passage money received 10,000 [ Stores Purchased 5,800 Lighterage charges 6,600 Depreciation (Annual) 96,000 R43 ‘Address Commission : 5% on outward and 4% on return freight. Primage 5% on freight. Stores in hand were valued at Z 3,000 on 30th Nov., 2015. Solution 2 Voyage No........Account of JAL PRATAP From : Mumbai To : London Commencement : 1.10.2015 ‘Arrival : 30.11.2015 Dr. cr | x z To Port dues 5,000 | By Freight : Outward 1,00,000 ‘To Bunker Cost | 25,000] Add : Primage @ 5% 5,000 | 1,05,000 ‘To Wages and Salary 55,000| Inward 70,000 ‘To Sundry Expenses 16,000] Add:Primage@5% 3,500 | 73,500 To Stores Purchased 5,800 | By Passage money 10,000 To Lighterange Charges 6,600 | By Stores in hand | 3,000 ‘To Depreciation (& 96,000 x 2/12) 16,000 ‘To Insurance ( 24,000 x 2/12) 4,000 To Address Commission 8,190 ‘To Net Profit 49.910] 1,91,500 7,91,500 from Athens to Kolkata starting on 1st January, 2016 and voyage 5 consisted of 900 ton of ‘and 100 ton of engineering ht charges were ® 150 per ton for fo ‘and @ 100 per ton for engineering goods. I ‘was 10%. Brokerage was payable at ‘expenses were : Athens ee z oe 2,000FINANCIAL ACCOUNTING Pi ooo 5 Harbour Wages 3,000 1,000 Loading Charges 2,000 a Other expenses were : Stores 10,000 Discharging Expenses 2,000 Postage 1,000 Salaries of Crew 10,000 ‘The ship was insured for % 10,00,000 at 1% for voyage policy of Hull. The freight was insured @ 172%, Depreciation is charged on the written down value of the ship at 5% per annum. The value of ship as on ist January, 2016 was ® 8,00,000 Solution 3 S. S. ODYSSEY Voyage Account (From January 1, 2016 to March 31, 2016) ] z z ‘To Diesel 20,000 | By Freight ‘To Port Charges 11,000!) By Primage ‘To Harbour Wages | 4,000 ‘To Loading Charges 2,000 Less : Brokerage 50% 1,51,525 ‘To Sotres 10,000 ‘To Discharging Expenses | 2,000 ‘To Postage | 1,000 ‘To Salaries of Crew 10,000 ‘To Depreciation 10, ‘To Insurance : | Hull 10,0007 Freight 798°, 10,798 | To P & L Alc (Net Profit) |___ 70,7279 € LLELS26 | 1% 9,000 2,000 = ® 11,000; 5 8,00,000x=5 x 5 «x 10,000; 100 “12 5 1,45,000 10 _ D0 8 4.500; 7 10,00,000 «3 _. oN =* 10,000 # 1,59,500 x1x1_ eo = * 197.50 Mlustration 4 2 © 8,000 + 1,000 = ¥ 4,000; 4 900% 150=% 1,35,000 110 100=¢ 10,00 = 1,45,000 + 145,00 1450=€ 13950; 28850028 ex, or 798 Approx. ° This is balancing amount. M, V. Indian Express ship commenced voyage on Ist Oct., 2015 from Mumbai to London and back. On 30th Nov., 2015 the return voyage was completed. It carri consignment of tea on its outward journey and of machinery ont return journey Theship was insured at an annual premium of 12,000 per ann Wages % 12,000; Port Charges % 1,400; Diesel % 7,500; Freight earned (outward) & 25,000; Stores % 4,200, Depreciation annual ® 24,000; Freight earned Gnward) 11,500 Alder soesonocn 54 on outward and 4% on return freight. Passage money received (outward journey) ? 2,500; Primage 18 ‘5% on freight. Stores and coal on hand were valued at ® 750 on Nov, 30, 2015, Prepare voyage account. Solution 4 M. V. INDIAN EXPRESS SHIP Be Voyage Account (from Oct. 1, 2015 to Nov. 30, 2015)7 VOYAGE ACCOUNTS prort Charges 1,400.00 + Primage 5% 875% 18,375.00 pages 12,000.00 | By Passage Money 2,500.00 pplosurance 2,000.00] By Stores and Coal on hand 750.00 faddress Commission 2,047.50" ppl. Ale (Net Profit) | 14,727.50 | | 47,875.00 | 41,875.00 2 12 000%2 # Thisis balancing amount. Ilustration 5 ae 2,000; §.S. Jaihind commenced a voyage on October 1, 2015 from Mumbai to London and back. The voyage sas completed on November 30, 2015. It carried a consignment of tea on its outward journey and of achinery on its return journey. The ship was insured and annual premium was ® 1,20,000, Freight earned (outward) & 5,00,000; Freight earned (inward) 3.50,000; Port Dues ? 30,000; Bunker 11,45,000; Wages and Salaries %'2,58,000; Stores % 76,000; Sundry Expenses ® 25,000; Passage money revived ® 50,000; Lighterage charge: 33,000; Depreciation annual % 4,80,000. Address commission 5% on outward and 4% on inward freight. Primage is 5% on freight, ‘The manager is entitled 5% commission on the profit earned after charging such commission. Stores and coal on hand were valued at % 15,000 on November 30, 2015. Prepare voyage account. Solution 5 8. §, JAIHIND SHIP Voyage Account (from 1st Oct, 2015 to 30th Nov., 2015) z z z To Bunker 1,45,000 | By Freight outward 5,00,000, To Wages & Salaries 258,000 |” Primage 5% '25 000° 5,25,000 To Port Dues '30,000 | By Freight inward 3,50,000, To Stores | 76,000] ~ + Primage 5% ~'17,500° 3,67,500 To S, Expenses 25,000 | By Passage Money ~ | '50,000 To Ligtherage Charges 33,000 | By Stores on hand | 15,000 ‘To Depreciation 80,000! | To Insurance 20, | R Se eeaision Teer | 's __ To Profit & Loss A/e 2,37,667 (Net Profit) baa 2 |__957,500] [9,57,500. T $£20,000°°2 . »g0,000, * 12000022 . » ap,000; ‘ 5,00,000 x5 _ » 95.000; 2 57,500 x 4 528.005» 6,250,581 <4 ae = € 14,700; € 26,250 + 14,700=8 40,950; § 3,80,000 x 5 100 =? 17,500; 25,000 + 33,00 O+ 80,000 + 20,000 + 40,950 = € 7,07,980:FINANCIAL ACCOUNTING ee - Sagres fion 6 eas Express is regularly employed on cargo trade between India and East Africa. She set on her voyage on Ist July, 2016 and arrived at her destination on 14th August, 2015. You are requested to prepare ‘EYopage Account bearing in mind the following particulars (a) The vessel was purchased in 2008 for® 100 lakh and at the time of purchase had 16 years of working life left. Depreciation on ship is charged on straight line basis. (b) Standing cost per day excluding recovery of depreciation is ® 22,000. (¢) The vessel consumer daily 14 tonne of fuel oil, 2 tonne of diesel and 15 tonne of fresh water. The cost of those are ® 1,000, % 1,350 and ¥ 20 per tonne respectively. (d) The vessel loaded the under-mentioned Cargo : 4,000 tonne on which freight of € 375 per tonne was charged and 3,500 tonne on which the rate of freight was t 190 per tonne. Both the rates are to be enhanced by a surcharge at 20% over the basic rates. (e) Freight brokers were due a brokerage at 2.5%. (® Port charges at loading and discharging ports were € 40,000 and & 85,000 respectively. Solution 6 Voyage Account of Alfa Express Dr. (Woyage No.1... ‘Period Ist July, 2015 to 14th August, 2015) Particulars __ | Amount _|_ Particulars _ ae z To Standing Cost (% 22,000 x 45) 9,90,000 | By Freight (Note 1) To Bunker Cost (Note 2) 7,865,000 To Port Charges (40,000 + 85,000) | 1,25,000 ‘To Depreciation (Note 3) 77,055 ‘To Brokerage (Note 4) 64,950 ‘To Net Profit transfer to Profit & Loss Ale Working Notes : (1) Calculation of freight earned 4,000 tonne @ ¥ 375 per tonne 8,500 tonne @ t 190 per tonne ‘Add : Surcharge 20% (2) Bunker Cost Fuel (14 x 45 x 1,000) Diesel (2x 45 x ¥ 1,350) Fresh Water (15 x 45 x & 20) (8) Depreciation for 45 days © 1,00,00,000 x ¥4s x #965 = & 77,055 (4) Brokerage 2.5% of € 25,98,000 = & 64,950. Mlustration 7 ship sailed from Kolkata ‘on 1.2.2016 and arrived at CI . ee as ge ie oe 00 M-T. at Kolkata port for Chennai port and Vishakapatanam. si -Vishakapatanam for Chennai. The freight charges were : Port respectively. Another—__——____VOYAGE accounts a ; freight is subject to 10% primage, ES eee sort se The hal nag so Brin te voyert"a% commision and 219% brokerage, The freight was SSapis 1 crore. The allowing wore the wxperage St De tt diferent Peeve’ at 96 pa. The eost of Kolkata Vishahapatanam Chennai z 20,000 Voyage Account {from 1st Feb. to 81st March, 2016) As } z To Port charges 76,000 | By Freight Charges 9,00,000° ‘Diesel 1,10,000! | By Primage ‘90,000 Th Stores é 60,0007 ‘Captain's contingencies 19,000 To Harbour wages 45,000 ‘ToAddress commission 49,500° ‘To Brokerage 24,750° | Tp Freight Insurance 4,950" ‘To Hull Insurance | 1,00,000* ‘Tb Hull Depreciation 50,000" ‘ToSalaries & Wages 1,60,000" TPR &L. Ale |_2,90,800") -9,90,000 | Opening stock ‘Add : Purchases Less: Closing stock Qty. x Rate ' z : 1,000 x 600 pea DO, Kolkata to Chennai port aaene to Vishakapatanam 400 Vishakapatanam to Chennai beat “Wn freight charges = 9,00,000 x 19, «x 0,00 "em ih charges + primase) = 85 *€ 990,000 = 49,500 +35 109 ** 9,90,000 = & 24,750 , Tfind out Insurance on freight @ 1/2% 25 5 €9,00,000 = 4,950 . 100,00,000 1 _ ¢ + 00,000 find aut Insurance on Hull forthe voyage @ 19 = ¢ :00.00,000%1 vea : FINANCIAL ACCOUNTIN Mlustration 8 ‘S. M. Himalaya shipset on voyage from Kolkata to Mumbai on 31st March, on which date the acco ‘are dosed, the return voyage had not been completed. The details for the entire voyage to Mombai back to Kolkata completed after 31st March are z Freight ¥ 4,00,000; Diesel consumption % 70,000; Stores consumed ® 30,000; Port charges ® 15 Salaries of crew % 40,000; Depreciation % 40,000; Insurance-Ship % 20,000; Insurance-Freight 7 Bf Primage 10%; Address commission 5% Only F 1,50,000 freight was available on return journey. Prepare voyage account upto 31st ¥ Expenses on full return voyage have been included Solution 8 S.M. HIMALAYA SHIP Voyage Account (Upto March 31) z z z To Diesel Consumed 70,000 | By Freight 4,00,000 ‘To Stores Consumed 30,000) Primage 40,000' | 4,40, To Port Charges 15,000 | By Voyage-in-Progress or To Salaries of Crew 40,000| expenses carried forward 1,18,7 ‘To Insurance: z ‘Ship 20,000 Freight 8,000 | 28,000 ‘To Depreciation 40,000. To Address Commission 22, To Voyage-in-Progress (freight in advance) 1,65, To Profit & Loss A/c (Net Profit) % 5,58,750 | 4 x10 100 =? 40,000 2 4,00,000 + 40,000 = + 4,40,000; #:49:590*5 - » 22,000 * Expenses: ‘Coal Consumed Stores Consumed ‘Port Charges 15,000 ‘Salaries of Crew 40,000 Insurance—Ship 20,000 40,000" Depreciation ‘Total expenses except address commission and freight insurance 235,000 ‘Half of ¢ 2,15,000 = 1,07,500; Address Commission = SAO 200 * _ x 22,000 Freight Insurance = € 8.00: 11,250; & 1,07,500 + 11,250 = 1,18,750