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STATEMENT OF PROFIT OR LOSS ON CONTAINER
Hiring charge(charge out price -credit back price) x containers sent
xxx
Add; profit on containers retained;(credit back – valuation)
No. of containers retained.
xxx
xxxx
Deduct Depreciation of containers (cost of new container – valuation)X New container bought xx
new container bought
Repairs xx
loss on container scrapped & sold sales – ( valuation of container) x (No. of container) xx
xxx
Profit on container
xxxx
The use of containers trading A/C
In this case the container trading A/C will be used in determining a profit or loss on container.
The container stock A/C will then be used in deducing an amount for depreciation of containers.
DR CONTAINER STOCK ACCOUNT CR

DETAILS
QTY
RATE
AMOUNT
DETAILS
QTY
RATE
AMOUNT
Balance b/d -premises
x
valuation
xxx
c.retained
xx
Value
xxx
customers
x
valuation
xxx
c.scrapped
xx

Tion
xxx
cash purchases
xx
cost price
xxx
depreciation
xx
31/12/ bal.c/d premises
xx
Value
xx

– customers
xx
Tion
xx
xxxx
xxxx
xxxx
xxxx
DR CONTAINER TRADING ACCOUNT CR

DETAILS
QTY
RATE
AMOUNT
DETAILS
QTY
RATE
AMOUNT
Returned
xx
CR back price
xxx
opening deposit return
x
credit back price

xxx
Retained
xx
valuation
xxx
charged to customer
xxx
charge out .pr
xxx
Scrapped
x
valuation
xx
sale of container
Depreciation
xx
scrapped
x
Valuation
xx
Repairs
xx
Profit
x

credit
closing deposit
xx
back price
xxx

xxxx
xxxx
DR CONTAINER DEBTORS CR
DETAILS
QTY
RATE
AMOUNT
DETAILS
QTY
RATE
AMOUNT
1/1 Bal.b/d
x

xxx
Returned
CR back
xx
Receipt
xx
Trading to customer
xxx
Charge out price
xxx
Retained
xx
31/12 Bal.c/d
xx
xxx
xxx
xxxx
xxx
xxxx

Balance b/d
xx
xxxx
EXERCISE
Pankraparcrimparcat co ltd sells oil in drums which are charged at Tshs 10 each. Customers returning drums within a month are credited with Tshs 7.
The following information is available from the books:
  1. Drums returnable on 1.1.999 4000
  2. Drums in stock as on 1.1.999 8000
  3. Drums purchased in 1999 at Tshs 5 each 30000
  4. Drums sent out in 1999 500000
  5. Drums returnable by customers 480,000
  6. Drums scrapped in 1999 (sold for 6000) 2000
  7. Drums sent out in Dec 1999 lying with customers 10000
  8. All drums at 31st Dec 1999 are to be valued at 50% of the cost price
  9. All drums as on 1.1.1999 were valued at Tshs 2/50 each
  10. Amount received from drum debtors as on 1.1.1999 was Tshs 1580000
Required:-
  1. Prepare the drums trading account and drums debtors A/c
  2. Prepare a statement of profit of loss on drums for the year ended 31st December 1999.
DR DRUMS STOCK ACCOUNT CR
DETAILS
QTY
RATE
AMOUNT

DETAILS
QTY
RATE
AMOUNT
Bal.b/d -premises
8000
2.5
20,000
Drums Trading scrapped
2000
2.5
5000
with customers
4000
2.5
10,000
Retained
14,000
45,000
cash;purchases
30000
5
150,000
Depreciation
65,000
Bal,c/d – premises
16,000
2.5
40,000
– customer
10,000
2.5
25,000
42,000

180,000
42,000
180,000
Balance b/d premises
16,000
2.5
40,000
customer
10,000
2.5
25,000
DR DRUMS DEBTORS ACCOUNT CR
DETAILS
QTY
RATE
AMOUNT
DETAILS
QTY
RATE
AMOUNT
Drum D Returned
480,000
7
3,336,000

Bal.c/d
4,000
7
28,000
Drum stock scrapped
2000
2.5
5000
Drum debtor sent
500,000
10
5,000,000
Retained
14,000
45,000

cash sale of scrapped
2000
6000
Depreciation
65,000
Profit
1,489,000

31/12 Bal.c/d
10,000
7
70,000
506,000
5,034,000
506,000
5,034,000
FIFO method is used:
Valuation drum retained = 10000 @2.50 = 25000
4000@5 = 20000
45000
Statement to profit or loss
Hiring charge = (10 – 7) 500000 1500000
Add: profit on co. Retained = (7-2.50) 14000 63000
1563000
Deduct: depreciation = (5 -2.50) 30000 7500
Loss on sales = 6000 – (2.50 x 2000) 1000
Profit 1487000
EXERCISE
Madras chemicals ltd supply their products in returnable drums which are charged out at Tshs 20 each. Customers returning the drums within a month are credited with Tshs 18. The company’s procedure is to retain Tshs 18 in deposit account till the expiry of the option period for return of the drums.
The following particulars are available from the drums:-
Numbers
Returnable drums are as on 1.1.1991 8000
Drums in stock as on 1.1.1991 16000
Drums purchased during 1991 at shs 15 per drum 20000
Drums sent to customers during 1991 300000
Drums returned by customers in 1991 288000
Drums returnable on 31.12.1991 15000
Drums scrapped in 1991 sold for Tshs 10000 2000
All drums as on 31.12.90 and 31.12.91 are to be valued at Tshs 10 each. All the amounts due in respect of drums had been collected from the customers
You are asked to show the ledger a/c for 1991 for:-
  1. Drums stock.
  2. Drums debtors
  3. Drums trading a/c
DR DRUMS STOCK ACCOUNT CR

ecolebooks.com
DETAILS
QTY
RATE
AMOUNT
DETAILS
QTY
RATE
AMOUNT
Balance b/d -premises
16,000
10
160,000
scrapped
2,000
10
20,000
with customer
8000
10
80,000
Retained
5000
10
50,000
purchases
20,000
15
300,000
Depreciation
100,000

Balance c/d – premises
22,000
10
220,000
customer
15,000
10
150,000
44,000
540,000
44,000
540,000
balance b/d -premises
22,000

10
220,000
with customers
15,000
10
150,000
DR DRUMS TRADING ACCOUNT CR
QTY
RATE

AMOUNT
QTY
RATE
AMOUNT
Returned
288,000
18
5,184,000
Balance b/d
8,000
18
144,000
Scrapped drum stock
2000
10

20,000
Drum debtor sent
300,000
20
6,000,000
Retained
5000
10
50,000
sale on scrapped
2000
10,000
Depreciation
100,000

profit
530,000
Balance c/d
15,000
18
270,000
310,000
6,154,000
310,000
6,154,000
DR DRUMS DEBTORS ACCOUNT CR
DETAILS
QTY
RATE
AMOUNT
DETAILS
QTY
RATE
AMOUNT
Balance b/d
8,000
80,000
Returned
288,000
18
5,184,000
Drum Tr
Retained
5000
Drum Trading sent
300,000
20
6,000,000
Balance c/d
15,000
896,000
308,000
6,080,000
308,000

6,080,000
Balance b/d
15,000
896,000
Statement on profit:
Hiring charge = (20 – 18) 300000 600000
Add: purchase on retained = (18 – 10) 5000 40,000
640,000
Less: depreciation (15 – 10) 2000 100,000
Loss on sales = 10000 – (10 x 2000) 10,000

Profit 530,000




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