Goods sent out on consignment Rs. 2,00,000. Consignor’s expenses Rs. 5,000. Consignee’s expenses Rs.2,000. Cash sales Rs. 1,00,000, credit sales Rs. 1,10,000. Consignment inventory Rs. 40,000. Ordinary commission payable to consignee Rs. 3,000. Del-credere commission Rs. 2,000. The amount irrecoverable from customer Rs. 2,000. What will be the profit on consignment?
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Solution
Rahim of Kolkata sends out 1,000 boxes to Ram of Delhi costing Rs. 100 each at an Invoice Price of Rs. 120 each. Goods send out on consignment to be credited in general trading
account will be:
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Solution
X of Kolkata sends out goods costing Rs. 1,00,000 to consignee Y of Delhi. 3/5th of the goods were sold by consignee for Rs. 70,000. Commission 2% on sales plus 20% of gross sales less all commission exceeds cost price. The amount of Commission will be:
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Solution
Remuneration paid for services is called commission. Commission is always paid on sales. Here normal
commission = 2% of 70,000 = 1,400
Special commission = 20% of (gross sales-all commission-cost of goods sold)
Let special commission be x
Then x = 20% of (70,000 – 1,400 – x – 3/5 × 1,00,000) = 20% of (70,000 – 1,400 – 60,000 – x)
Or x = 20% of (8,600 – x)
Or x = 1,720 –.2x
Or 1.2x = 1,720
Or x = 1,433
Thus total commission = 1,433 + 1,400 = Rs. 2,833
If unsold goods costing Rs. 20,000 is taken over by Venturer at Rs. 15,000, the Joint Venture A/c will be credited by:
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Solution
For goods taken over by coventurers, joint venture account will be credited by the amount of the goods
taken over i.e. Rs. 15,000 in this case.
A and B entered into a Joint Venture. A purchased goods costing Rs. 2,00,000, B sold 4/5th of the same for Rs. 2,50,000. Balance goods were taken over by B at cost less 20%. If same set of books is maintained, find out profit on venture.
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Solution
Sale price of the 4/5th goods = Rs. 2,50,000
Cost of 4/5th goods = Rs. 2,00,000
Drawings = 1/5 of 2,00,000 – 20% of (1/5 of 2,00,000) = 40,000 – 8,000 = Rs. 32,000
Profit on venture = sale price less purchase cost add drawings = 2,50,000 – 2,00,000 + 32,000 = Rs. 82,000
R and M entered into a joint venture to purchase and sell new year gifts. They agreed to share the profits and losses equally. R purchased goods worth Rs.1,00,000 and spent Rs.10,000 in sending the goods to M. He also paid Rs. 5,000 for insurance. M spent Rs. 10,000 as selling expenses and sold goods for Rs.2,00,000. Remaining goods were taken over by him at Rs. 5,000. Find out profit on venture.
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Solution
Sales price = Rs. 2,00,000
Add: drawings = Rs. 5,000
Less: purchase cost = Rs. 1,00,000
Less: transportation cost = Rs. 10,000
Less: insurance cost = Rs. 5,000
Less: selling exp. = Rs. 10,000
Thus profit = Rs. 80,000
A and B enter into a joint venture to underwrite the shares of K Ltd. @ 5% underwritting commission. K Ltd. make an equity issue of 100000 equity shares of Rs 10 each. 80% of the issue are subscribed by the party. The profit sharing ratio between A and B is 3:2. The balance shares not subscribed by the public, purchased by A and B in profit sharing ratio. How many shares to be purchased by A?
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Solution
Total shares subscribed by public = 1,00,000 × 80% = Rs. 80,000
Remaining shares purchased by A and B = Rs. 20,000
Shares purchased by A in his profit sharing ratio = 3/5 of 20,000 = 12,000 shares
A drew a bill on B for Rs. 50,000 for 3 months. Proceeds are to be shared equally. A got the bill discounted at 12% p.a. and remits required proceeds to B. The amount of such remittance will be _________
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Solution
Discounting bills of exchange is a financial service, where the Bank purchases drawn bills, from the domestic trade transactions, confirmed in particular with an invoice — with right of recourse to you — and credits you with the amount of the bill of exchange less discount interest and additional costs related to the bill, accrued in advance from the discount date to the bill payment term.
Here amount of the bill = 50,000
Amount to be paid to bank on discounting at 12% pa = 50,000 × 12/100 × 3/12 = Rs. 1,500
Thus amount received from bank on discounting = 50,000 – 1,500 = Rs. 48,500
The amount of remittance to B will be = 48,500/2 = Rs. 24,250
A draws a bill on B for Rs. 30,000. A wants to endorse it to C in settlement of Rs. 35,000 at 2% discount with the help of B’s acceptance and balance in cash. How much cash A will pay to B?
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Solution
The drawer or holder of the bill may endorse (transfer) the bill in favor of his trades payable for the clearance of his own debts.
Amount due to C = 35,000
Amount to be settled at 2% discount = 35,000 × 98/100 = Rs. 34,300
Amount of the bill endorsed = Rs. 30,000
Thus amount to be paid in cash = Rs. 4,300
Ram’s acceptance to Dinesh for Rs 8,000 renewed for 3 months on the condition that Rs. 4,000 be paid in cash immediately and the remaining amount will carry interest @ 12%
p.a. The amount of interest will be _________
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Solution
Sometimes, acceptor of a bill finds himself unable to meet his acceptance on the due date. So he may approach the drawer of the bill before the maturity date arrives, to cancel the old bill and draw a new bill with extended date. The acceptor in this case will of course have to pay interest for the extended period.
Total amount of the bill = 8,000
Amount paid in cash = 4,000
Amount due = 4,000
Interest for 3 months @ 12% p.a. = 4,000 × 12/100 × 3/12 = 120