Consignment. Chapter 14

Transcription

1 Chapter 14 Consignment Consignment means sending the goods to an agent for sale on behalf of the owner. 1. The person who sends the goods is called consignor. He is the principal. 2. The parson to whom goods are sent is called consignee. He is the Agent. He sells the goods on behalf of the Consignor. 3. The ownership of the goods, remains with the consignor. The agent does not become the owner even though they are in his possession. Ownership on sale is transferred to the buyer. 4. Consignor sends a proforma invoice along with the goods sent to the Consignee to give information regarding the goods sent. 5. The Consignee recovers from the Consignor all expenses incurred by him for the purpose of consignment. 6. The Consignee receives a commission from the Consignor which is a percentage on the sales. 7. The Consignee on the sale of goods sends to the Consignor a statement called Account Sales. This statement shows the sales made by the Consignee, the expenses incurred on behalf of the Consignor, the commission earned by the Consignee and the balance due to the Consignor. 8. Expenses of the Consignee are of two types Recurring & Non Recurring. Those expenses which are incurred before the goods reach the godown of the Consignee are called Non Recurring Expenses. 9. Non Recurring expenses are also called as non selling expenses eg. Loading, unloading, Freight. 10. Recurring expenses of the Consignee are also called as selling expenses eg. Godown rent, wages, Insurance, Advertisement. Commission to Consignee : Commission is the remuneration paid by the Consignor to the Consignee for the services rendered (a) (b) Ordinary Commission : It is based on fixed percentage of the gross sales made by the consignee. Del Credere Commission : It is an additional commission given to the consignee as a protection to the consignor against bad debts. After providing the del-credere commission, bad debts is not a loss of the consignor but is a personal loss of the consignee. If Del Credere commission is paid bad debts if any will be ignored by the Consignor but will be debited by the consignee to his Commission A/c. It is calculated on Credit sales. If the credit sales are not given then they will be calculated on the given Sales. 121

2 (c) IDEAL / CPT / ACCOUNTS / CONSIGNMENT Over Riding Commission : It is an extra commission allowed by the consignor to the consignee to promote sales at higher price. it is calculated on the difference between Actual sales and the standard (invoice) Sales. I. Goods sent at cost : The consignor sends the goods to the consignee at the Accounts prepared by consignor: (a) Consignment A/c : It is prepared to find the profit or loss made on consignment. Consignment A/c is like a profit & loss account debited for all the expenses and losses and credited for all the income and gains. The difference in this account is the Profit / loss which is transferred to the General P & L A/c. (b) Consignee A/c : It is prepared to find the amount to be received from the consignee. (c) Goods sent on consignment A/c : This account shows the cost of the goods sent on consignment. At the end of the year the balance in this account is transferred to Trading A/c. Accounts prepared by Consignee : The consignee prepares only one account i.e. Consignor A/c. It is prepared to find the amount payable to the consignor. When the goods are received by the consignee he does not pass any entry as the goods do not belong to him. The ownership of the goods always remains with the consignor and is directly passed to the seller on sale. When the consignee gets commission it is credited to his general P & L A/c. In case the consignee is getting del credere commission and there is bad debts then the consignee debits this loss to his Commission A/c. Dr. Consignment A/c Cr. To Goods sent on con. A/c xx By Goods sent (loading) xx To Cash / Bank (Expense) xx By Consignee (Sales) xx To Consignee (Exps. / Comm.) xx By Abnormal loss xx To Stock Reserve By Consignment Stock xx To Gen. P & L A/c (Profit) xx By Gen. P & L A/c (Loss) xx Total xx Total xx Dr. Consignee A/c Cr To Consignment A/c xx By Con. A/c (Exps./ Comm.) xx By Cash / Bank / Bills A/c xx Total xx Total xx Valuation of Consignment Stock Cost + Proportionate Expense of Consignor xx + Proportionate non recurring expenses of consignee xx Total II. Goods sent at Invoice Price : When the consignor does not want to disclose the cost of the goods to the Consignee he sends the goods at a price higher than the cost price. This price is known as the Invoice Price. The difference between the Invoice Price and the cost price is known as loading. When goods are sent at invoice price all transactions related to the goods (except sales) should be recorded at the invoice price and immediately the loading should be reversed. 122 xx xx

3 Loading = Invoice Price Cost Price Loading may be a Percentage on the cost or on the Invoice price. 1/5 th of Cost Price = 1/6 th of Invoice Price 1/4 th of Cost Price = 1/5 th of Invoice Price 1/3 rd of Cost Price = 1/4 th of Invoice Price Loading included in the closing stock is known as stock reserve. This stock reserve (i.e. unrealized profit) is shown as a deduction from Consignment stock in the Balance sheet. III. Normal Loss : It is a loss which takes place due to the inherent characteristics of the goods. It is an unavoidable loss. It cannot be insured. It does not have any value. The cost of remaining good units will increase to the extent of normal loss. Eg. of Normal loss : Evaporation, leakage. (1) Quantity of Closing Stock (2) Valuation of Closing Stock Gross goods sent xx Total Cost of goods sent xx - Normal Loss xx + All expenses of consignor xx Net goods sent xx + All non Recurring exp of consignee xx - Goods Sold xx Quantity Of Closing Stock xx Total Cost xx Closing Stock = IV. Abnormal Loss : Total Cost Qty. of net goods sent Qty. of Closing Stock It is an avoidable loss. It can be insured. It is valued on the same basis as consignment stock. However if the abnormal loss takes place before the goods reach the consignee then the consignees non-recurring expenses should be ignored while valuing abnormal loss. Abnormal loss will be debited to General Profit and Loss A/c. (1) Quantity of Closing Stock (2) Valuation of Abnormal Loss Goods sent xx Cost of Abnormal Loss xx - Abnormal Loss xx + Prop. Expenses of consignor xx Goods received xx + Prop. non Recurring expenses of consignee xx - Goods Sold xx Closing Stock Quantity xx Value of Abnormal Loss xx - Insurance Claim xx Net Loss trf. to P& L A/c xx Profit & Loss A/c Dr. To Consignment A/c Entry of Abnormal loss 123

4 Consignor & Consignee Consignor Consignee 1. Goods Sent on Consignment Consignment A/c Dr. - To Goods sent on consignment 2. Expenses paid by Consignor Consignment A/c Dr. - To Cash/Bank A/c 3. Expenses paid by Consignee Consignment A/c Dr. Consignor A/c Dr. To Consignee A/c To Cash/Bank A/c 4. Goods Sold for Cash Consignee A/c Dr. Cash/Bank A/c Dr. To Consignment A/c To Consignor A/c 5. Goods sold on credit Consignee A/c Dr. Debtors A/c Dr. To Consignment A/c To Consignor A/c 6. Commission Payable to Consignee Consignment A/c Dr. Consignor A/c Dr. To Consignee A/c To Commission received A/c 7. Cash Received from Debtors - Cash/Bank A/c Dr. To Debtors A/c 8. Discount allowed to Debtor Consignment A/c Dr Consignor A/c Dr. To Consignee A/c To Debtors A/c 9. Bad debts When delcredere commission is not paid Consignment A/c Dr. Consignor A/c Dr. To Consignee A/c To Debtors A/c 10. Bad debts When delcredere commission is paid - Bad debts A/c Dr. To Debtors A/c 11. Closing Stock Consignment Stock A/c Dr. - To Consignment A/c 12. Profit on Consignment Consignment A/c Dr. - To Profit and Loss A/c Examples: 1) A consign 100 kg of Tea costing 200 per kg. to Mr. B. B is entitled to get 5% commission on sales. Expenses of A were 2000/-, expenses of B were 1,000 of which 60% were non-recurring. B sold 80% of the Tea at 250 per kg. Find profit on consignment and Amount received by A from B. 2) A consigns 100 kg of Tea costing 200 at 225 to Mr. B. Expenses of A 2,000. Expenses of B 1,000 of which 60% are Non-recurring. B sold 80% of the goods at 250 per kg. B is entitled to get 5% commission on sales, 2% del credere commission and 20% of the surplus above the Invoice price. Find Profit on consignment. 3) A consigns 100 kg of Tea costing 200/- per kg. to Mr. B expenses of A 4,000, Non selling expenses of B 1,000, Selling expenses of B kg was lost in Transit. B sold 85 kg of Tea at 300 per kg. Commission payable to B 5%. Find profit on consignment ifthe loss is treated as a) Abnormal loss b) Normal loss 124

5 MULTIPLE CHOICE QUESTIONS 1. A proforma invoice is sent by (a) Consignee to consignor (c) Debtors to consignee (b) Consignee to debtors (d) Consignor to consignee 2. Which of the following expenses of consignee will be considered as non-selling expenses: (a) Advertisement (b) Insurance (c) Selling Expenses (d) None of the above 3. The consignment accounting is made on the following basis: (a) Accrual (b) Realisation (c) Cash basis (d) None of the above 4. The commission received from consignor will be transferred to which account? (a) General Trading (b) General P/L (c) Balance Sheet (d) None of these 5. The balance of goods sent out on consignment will be transferred to: (a) General P/L (b) General Trading (c) Balance Sheet (d) Capital A/c 6. The consignee normally gets the reward in the form of for selling goods on behalf of the consignor (a) commission (b) share in profit on consignment (c) dividend (d) none 7. When goods are sent on consignment, account is debited. (a) consignee s (b) consignment (c) Goods sent on consignment (d) none 8. When expenses are incurred by the consignee, account is credited in the books of the consignor. (a) bank (b) consignee s (c) consignor (d) none 9. For commission earned by the consignee, account is credited in the books of the consignor. (a) commission (b) consignee s (c) consignor s (d) none 10. Stock on consignment appears in the balance sheet of the (a) consignor (b) consignee (c) coventurer (d) none 11. When the consignee receives the goods from the consignor (a) Goods are debited to goods received on consignment account (b) No entry is to passed (c) Credits consignor s personal account (d) None 12. Goods dispatched by a manufacturer or wholesaler to an agent for the purpose of warehousing and eventual sale are called. (a) Consignment (b) Joint Venture (c) Partnership (d) None 125

6 13. The periodical statement rendered by the consignee to the consignor showing that there in sale proceeds less expenses, commission, remittance and the resultant balance due by him is called an. (a) Sales Account (b) Invoice (c) Account Sales (d) None of these 14. The document giving the description of goods and their price sent to the consignee by the consignor is known as. (a) Porforma Invoice (b) Debit note (c) Credit note (d) None 15. Where goods are sent on consignment, credit is given to (a) Purchases account (b) Goods sent on consignment account (c) Consignment account (d) Consignee s account 16. The relationship between the consignor and consignee is that of (a) Principal and agent (b) Seller and buyer (c) Creditor and debtor (d) Bailor and baileee. 17. Account sales indicates (a) the net amount due by consignee to consignor (b) the net amount due by consignor to consignee by way of commission (c) the net sales effected by consignee (d) none of the above. 18. Commission will be shared between : (a) Consignor & Consignee (c) Only Consignor 19. A Proforma invoice is sent by : (a) Consignee to Consignor (c) Debtors to Consignee (b) Only Consignee (d) Third Party (b) Consignor to Consignee (d) Debtors to Consignor 20. Which of the following statement is correct : (a) Consignee will pass a journal entry in his books at the time of receiving goods from consignor. (b) Consignee will not pass any journal entry in his books at the time of receiving goods from consignor. (c) The ownership of goods will be transferred to consignee at the time of receiving the goods. (d) Consignee will treat consignor as creditor at the time of receiving goods. 21. Consignment A/c is prepared in the books of : (a) Consignor (b) Consignee (c) Third Party (d) None 22. In the books of consignor, the loss on consignment business will be charged to : (a) Consignee A/c (b) General Trading A/c (c) General P / L A/c (d) Bank A/c 126

7 23. If consignor draws a bill on consignee and discounts it with the bank, the discounting charges will be debited in : (a) General P / L (b) Consignment A/c (c) Consignee (d) Debtors 24. For closing stock held by consignee which account must be debited (a) Consignment Stock A/c (b) Sales A/c (c) Consignee A/c (d) Consignment A/c 25. On earning the commission on sales, the consignee debits in his books (a) Consignor A/c (b) Profit and loss A/c (c) Commission earned A/c (d) Consignment A/c 26. Balance in Consignment Account shows (a) Amount due to consignee (c) Profit or Loss on consignment (b) Amount due from consignee (d) Stock lying with consignee 27. Which of these accounts are not opened in the books of consignor? (a) Consignment A/c (b) Commission Earned A/c (c) Goods sent on Consignment A/c (d) Consignees Personal A/c 28. Which of these is not a feature of Consignment? (a) There is Principal and Agent relationship between the Consignor and Consignee (b) Consignor presents proforma invoice to the Consignee (c) The property in the goods passes on to the Consignee after transfer of the goods (d) Consignor reimburses all the expenses to the Consignee 29. Who is a Consignor? (a) Party receiving goods (c) Party buying goods (b) Party sending goods (d) Party suing any of the above 30. For closing stock held by consignee which account must be credited (a) Consignment Stock A/c (b) Sales A/c (c) Consignee A/c (d) Consignment A/c 31. Account Sales. (a) have a very particular format (c) must be prepared by law (b) does not have a specific format (d) given by consignor to consignee 32. In Consignment Accounting, to Consign means. (a) to receive (b) to purchase (c) to send (d) to transfer 33. If the consignor carries on trading business, then the balance of goods sent on Consignment A/c is transfer to. (a) Profit and Loss A/c (b) Trading A/c (c) Purchase A/c (d) Consignment A/c 127

8 34. While valuing closing stock in consignment, the expenses incurred by consignor are added to the cost of stock. (a) Full (b) Half (c) Proportionate (d) Nil 35. In Consignment Account, if discount is treated as Consignment Expenses it is debited to. (a) Consignment A/c (b) Profit & Loss A/c (c) Consignee A/c (d) Consignor A/c 36. The risk of stock on consignment lies with : (a) Consignor (b) Consignee (c) Buyer (d) Seller 37. X send out goods costing 2,00,000 to Y. Consignor expenses 5,000. Consignee expenses in relation to sales 3,000. 4/5 th of the goods were sold at 20% above cost. The profit on consignment will be (a) 20,000 (b) 30,000 (c) 25,000 (d) 40, Ram send 50 fans to Shyam costing 500 per fan to be sold at 20% above cost price. Sales value will be (a) 25,000 (b) 20,000 (c) 30,000 (d) 31, A seller sells goods at a profit of 25% on sales. In a particular month, he sold goods costing 45,000. Sales price of goods will be (a) 56,250 (b) 65,000 (c) 55,000 (d) 60, P of Delhi sends out 100 boxes of toothpaste costing 200 each. Each box consist of 12 packets. 60 boxes were sold by consignee at 20 per packet. Amount of sale value will be: (a) 14,400 (b) 12,000 (c) 13,200 (d) 14, Rabin consigned goods for the value of 8,250 to Raj of Kanpur paid freight etc. of 650 and insurance 400. Drew a bill on Raj at 3 months after date for 3,000 as an advance against consignment, and discounted the bill for 2,960. Received Account Sales from Raj showing that part of the goods had realized gross 8,350 and that his expenses and commission amounted to 870. The stock unsold was valued at 2,750. Consignee wants to remit a draft for the amount due. The amount of draft will be: (a) 2,130 (b) 4,480 (c) 5,130 (d) 5, X of Kolkata sends out 1000 bags to Y of Delhi costing 2,000 each. 600 bags were sold at 10% above cost price. Sale value will be: (a) 13,20,000 (b) 13,00,000 (c) 12,00,000 (d) 13,50, X of Kolkata sends out 400 bags to Y of Delhi costing 200 each. Consignor expenses 2,000. Y expenses non selling 2,000, selling 1, bags were sold by Y. Value of consignment stock will be: (a) 20,400 (b) 20,200 (c) 20,000 (d) 21,

9 44. X of Kolkata sent out 2000 boxes costing 100 each with the instruction that sales are to be made at cost + 45%. X draws a bill on Y for an amount equivalent to 60% of sales value. The amount of bill will be: (a) 1,74,000 (b) 2,00,000 (c) 2,90,000 (d) 1,20, per kg were sent on consignment. 125 kg were sold by consignee. Expenses incurred by consignor were : Freight 750, Insurance 425, loading charges 125. Expenses incurred by consignee were : Unloading 100, Find the value of unsold stock. (a) 1100 (b) 1600 (c) 1600 (d) C of Bangalore consigned goods costing 3,000 to his agent at Delhi. Freight and insurance paid by consignor 100. Consignee s expenses /5 th of the goods were sold for 3,000. Commission 2% on sales. Consignee want to settle the balance with the help of a bank draft. The amount of draft will be: (a) 2,740 (b) 2,800 (c) 3,000 (d) 1, Goods sent on consignment 7,60,000. Opening consignment stock 48,000. Cash sales 7,00,000. Consignor s expenses 20,000. Consignee s expenses 12,000. Commission 20,000. Closing consignment stock 3,00,000. The profit on consignment is: (a) 1,50,000 (b) 1,40,000 (c) 92,000 (d) None 48. X of Kolkata sends out 1000 boxes to Y of Delhi costing 20 each. Consignor s expenses /5 th of the boxes were sold at 25 each. The profit on consignment will be: (a) 2,400 (b) 2,000 (c) 3,000 (d) 3, Goods sent out on consignment 2,00,000. Consignor s expenses 5,000. Consignee s expenses 2,000. Cash sales 1,00,000, credit sales 1,10,000. Consignment stock 40,000. Commission payable to consignee 3,000. The amount irrecoverable from customer 2,000. What will be the profit on consignment? (a) 38,000 (b) 40,000 (c) 43,000 (d) None 50. Ram of Delhi sends out goods costing 2,00,000 to Krishna of Brindaban. Consignor s expenses 5,000. Consignee s expenses in relation to sales 2,000. 4/5 th of the goods were sold at 20% above cost. The profit on consignment will be: (a) 26,000 (b) 32,000 (c) 26,200 (d) 33, Del-credere commission is allowed to cover (a) Bad debts (b) Abnormal loss (c) Normal loss (d) None of the above 52. Goods costing 2,00,000 sent out to consignee at cost + 25%. Invoice price of the goods will be (a) 2,40,000 (b) 2,30,000 (c) 2,10,000 (d) 2,50, Goods costing 2,00,000 were sent on consignment basis. These goods are invoiced to give a gross margin of 20% on invoice price. The amount of loading is: (a) 50,000 (b) 40,000 (c) 60,000 (d) 55,

10 54. Goods costing 3,00,000 sent out to consignee at cost plus 25%. Invoice value of goods will be (a) 3,75,000 (b) 3,50,000 (c) 2,25,000 (d) 2,50, Goods of the invoice value 2,40,000 sent out to consignee at 20% profit on cost. The loading amount will be: (a) 40,000 (b) 48,000 (c) 50,000 (d) None 56. X of Kolkata send out 500 bags to Y costing 400 each at an invoice price of 500 each. Consignor s expenses 4,000 consignee s expenses, non-selling 1,000, selling 2, bags were sold. The amount of Stock Reserve will be (a) 10,000 (b) 20,400 (c) 20,000 (d) Nil 57. X of Kolkata sends out certain goods to Y of Mumbai at cost + 25%. ½ of the goods received by Y is sold at 1,76,000 at 10% above IP. Invoice value of goods send out is: (a) 3,00,000 (b) 3,20,000 (c) 1,80,000 (d) 3,40, Rahim of Kolkata sends out 1000 boxes to Ram of Delhi costing 100 each at an IP of 120 each. Goods send out on consignment to be credited in general trading will be: (a) 1,00,000 (b) 1,20,000 (c) 20,000 (d) None of these 59. X of Kolkata sends out certain goods at cost + 25%. Invoice value of goods sends out 2,00,000. 4/5 th of the goods were sold by consignee at 1,76,000. Commission 2% upto invoice value and 10% of any surplus above invoice value. The amount of commission will be: (a) 4,800 (b) 5,200 (c) 3,200 (d) 1, Rahim of Kolkata sends out goods of the invoice value 2,00,000 to Ram of Delhi at cost + 25%. The amount of loading will be: (a) 50,000 (b) 40,000 (c) 30,000 (d) 60, Goods sent to consignment at cost +33 1/ 3%. The percentage of loading on invoice price will be: (a) 25% (b) 33 1/3 % (c) 20% (d) None 62. Dravid of Delhi sends out goods to Sourav of Kolkata, goods costing 2,00,000 at cost + 25%, with the instruction to sell it at cost +50%. If 4/5 th of the goods are sold at stipulated selling price and commission allowable 2% on sales. What will be the profit on consignment in the books of consignor? (a) 86,200 (b) 70,000 (c) 75,200 (d) 76, Del credere commission is normally calculated on sale. (a) Credit (b) Cash (c) Total (d) None of these 64. Which of the following statement is not true : (a) If del-creder s commission is allowed, bad debt will not be recorded in the books of consignor. (b) If del-creder s commission is allowed, bad debt will be debited in consignment account. (c) Del-creder s commission is allowed by consignor to consignee (d) Del-creder s commission is generally relevant for credit sales 130

11 65. If del-credere commission is allowed by consignor to consignee the bad debt treatment will be (In the books of Consignor) : (a) Will not be recorded in consignor s books (b) Bad Debt will be debited in Consignor s A/c (c) Bad Debt will be charged to General P / L A/c (d) Bad Debt will be recoverable along with credit sales 66. If the consignee is given a del-credere commission then, the amount of 5,000 is not received due to dispute regarding quality (a) This amount will be borne by consignee (b) This amount will be borne by consignor and consignee (c) This amount will be borne by consignor (d) None of the above 67. X of Kolkata send out 500 bags to Y costing 400 each at an invoice price of 500 each. Consignor s expenses 4,000 consignee s expenses, non-selling 1,000, selling 2, bags were sold. The amount of consignment stock at invoice price will be: (a) 50,900 (b) 50,800 (c) 50,000 (d) 51, The price shown in the proforma invoice is generally (a) Selling price (b) Cost price (c) Market price (d) Purchase price 69. Commission provided by the consignor to the consignee to promote credit sale is known as : (a) Ordinary Commission (b) Del credere commission (c) Over riding Commission (d) Special Commission 70. If no del credere commission is paid to the consignee, account will be debited for credit sale by the consignor. (a) Consignment account (b) Consignee account (c) Consignor account (d) Consignment debtors account 71. Nikhil of Delhi sent out goods costing 45,000 to Shyam of Kolkata at cost +33 1/3%. 1/10 th of goods were lost in transit and 2/3 rd of the goods are sold at 20% above IP. The amount of sales value will be (a) 36,000 (b) 60,000 (c) 54,000 (d) 43, Gopal sent out certain goods to Ramesh of Delhi. 1/10 th of the goods were lost in transit. Invoice value of goods lost is 12,500. Invoice value of goods sent out on consignment will be (a) 1,25,000 (b) 1,20,000 (c) 1,40,000 (d) 1,00, kgs. of Apple are consigned to a wholeseller the cost being 8 per kg. plus 925 of freight incurred. It is concluded that a loss of 15% is unavoidable the cost per kg. of apple will be (a) 9.41 (b) (c) (d)

12 74. X of Kolkata sends out 2000 boxes to Y of Delhi costing 100 each. Consignor s expenses 5,000. 1/10 th of the boxes were lost in consignee s godown and treated as normal loss boxes were sold by consignee. The value of consignment stock will be: (a) 68,333 (b) 61,500 (c) 60,000 (d) 60, X of Kolkata send out 1000 bag to Y of Delhi costing 200 each. Consignor s expenses 2,000. Y s expenses non-selling 1,000, selling 2, bags were lost in transit. Value of lost in transit will be: (a) 20,200 (b) 20,300 (c) 23,000 (d) Nil 76. X of Kolkata sends out goods costing 3,00,000 to Y of Mumbai at cost + 25%. Consignor s expenses 5,000. 1/10 th of the goods were lost in transit. Insurance claim received 3,000. The net loss on account of abnormal loss is: (a) 27,500 (b) 25,500 (c) 30,500 (d) Nil 77. Ram of Kolkata sends out 1000 boxes to Y of Delhi, costing 200 each. 1/10 th of the boxes were lost in transit. 2/3 rd of the boxes received by consignee is sold at cost + 25%. The amount of sale value will be: (a) 1,00,000 (b) 1,50,000 (c) 1,20,000 (d) 1,40, Goods sent on consignment invoice value 2,00,000 at cost /3 %. 1/5 th of the goods were lost in transit. Insurance claim received 10,000. The amount of abnormal loss to be transferred to General P/L is: (a) 30,000 (b) 20,000 (c) 35,000 (d) None of these 79. X of Kolkata sends out 100 boxes to Y of Delhi costing 200 each. Consignor s expenses 4,000. Consignee s expenses non-selling 900, selling /10 th of the boxes were lost in transit. 2/3 rd of the boxes received by consignee were sold. The amount of consignment stock will be: (a) 7,200 (b) 7,500 (c) 7,000 (d) 8, X of Kolkata sends out 100 boxes to Y of Delhi costing 100 each. Consignor s expenses 1,000. Consignees expenses selling /5 th of the goods sold by consignee, ½ of the balance goods were lost in consignee s godown due to fire. The value of abnormal loss will be: (a) 2,000 (b) 2,500 (c) 2,200 (d) 2, A of Ahmedabad sent out certain goods so as to show a profit of 20% on IP. 1/10 th of the goods were lost in transit. The cost price of goods lost is 20,000. The invoice value of goods sent out is: (a) 2,50,000 (b) 2,00,000 (c) 2,25,000 (d) 2,40, A loss caused by is called abnormal loss. (a) evaporation (b) theft (c) both (d) none 83. Abnormal loss is to the Consignment account. (a) debited (b) credited (c) both (d) none of these 132

13 84. In case of stock destroyed by fire and it is insured, then the excess of loss over insurance claim is debited to account. (a) profit and loss (b) consignment (c) both (d) none of these 85. If a portion of the goods consigned are destroyed before the delivery is taken by the consignee, then the expenses incurred by the consignee be added for calculating the loss of stock. (a) will (b) will not (c) both (d) none of these 86. Loss of stock is said to be normal when (a) It is because of leakage (b) It is unavoidable and natural (c) The stock is destroyed by fire (d) None of these 87. Abnormal loss of stock after adjusting for recovery from insurance claim is debited to (a) trading account (b) profit and loss account (c) capital account (d) a special account which is carried forward from year to year. 88. Goods sent on consignment 5000 kg, costing 50 each. Abnormal loss due to accident 500kg. Sold by the consignee : 4000 kg. Value abnormal loss and closing stock, if scrap value is Nil. (a) 25,000, 25,000 (b) 25,000, 50,000 (c) 50,000, 75,000 (d) 50,000, 50, Ram of Jaipur sends out goods costing 1,00,000 to Amar of Alwar. 3/5 th of the goods were sold by consignee for 70,000. Commission 2% on sale plus 20% of gross sale less all commission exceeds cost price. The amount of commission will be (a) 2,900 (b) 3,333 (c) 2,833 (d) 2, Suresh of Delhi consigned 600 fans to Naresh of Agra to be sold on his account and at his risk. The cost of each fan is 300 Suresh paid 6,000 as freight and insurance Naresh paid 1,500 as octroi and cartage. 2,000 as rent; and 1,500 as insurance. 500 fans were sold by Naresh for 1,80,000 Naresh was entitled to a commission of 4% on 350 per fan and 20% of any surplus price realized. Consignment profit will be (a) (b) (c) (d)