' unacademy PRINCIPLES AND PRACTICE OF ACCOUNTING Target Audience: 1. CA FOUNDATION 2. CS FOUNDATION 3. CWA FOUNDATION PRESENTED BY: RAJESH K. VERMA Share & Subscribe- OFFICIAL ID: https://unacademy.com/user/rajeshkverma497Y unacademy EXAMPLE-2 ‘Shri Mehta of Mumbai consigns 1,000 cases of goods costing 1,000 each to Shri Sundaram of Chennai. Shri ‘Mehta pays the following expenses in connection with consignment: Carriage 10,000 Freight 30,000 Loading charges 10,000 ‘Shri Sundaram sells 700 cases at & 1,400 per case and incurs the following expenses: Clearing charges 8500 Warehousing and storage 17,000 Packing and selling expenses 6,000 Itisfound that $0 cases have been lost in transit and 100 cases are stil in transit. Shri Sundaram is entitled to a commission of 10% on gross sales, Draw up the Consignment Account and ‘Sundaram Account in the books of ShriMehta.Y unacademy Tn the books of Shri Mehta Consignment to Sundaram of Chennai Account To Goods sent on Consignment To Bank (Expenses) To Sundaram (Expenses) ‘To Sundaram (Commission) To Profit on Consignment to Profit & Loss A/c By Sundaram (Sales) By Loss in Transit 50 cases @ 31,050 each 50,000 | By Consignment Inventories Inhand 150@7 1,060each In transit 100 @@ 1,050 each‘Sundaram’s Account To Consignment to Chennai A/c © unacademy (Expenses) 31,500 By Consignment A/c (Commission) 98,000 By Balance c/d 850,500 980,000 Working Notes: ()Consignor’s expenses on 1,000 cases amounts to 850,000; it comes to 250 per case. The cost of cases lost will be computed at 71,050 per case. (ii) Sundaram has incurred % 8,500 on clearing 850 cases, ie, 210 per case; while valuing closing inventories with the agent 210 per case has been added to cases in hand with the agent. (ii) Ithas been assumed that balance of %8,50,500 is not yet paid.© unacademy Thank you........