Mahadev consigned 100 bales of cotton to Satyam at invoice price of ₹ 1,000 per bale. Consignment expenses were ₹ 10,000. 10 bales stolen in transit and the insurance company accepted the claim amount of ₹ 8,000. Satyam received the remaining bales and paid cart hire ₹ 2,000. 90

Question

Mahadev consigned 100 bales of cotton to Satyam at invoice price of ₹ 1,000 per bale. Consignment expenses were ₹ 10,000. 10 bales stolen in transit and the insurance company accepted the claim amount of ₹ 8,000. Satyam received the remaining bales and paid cart hire ₹ 2,000. 90 bales were sold by Satyam @ 1,500 per bale. Prepare consignment account at cost price, if goods consigned with cost plus 25% on profit.

Accepted Answer

>

> [!TLDR]
> Cost per bale = 1,000 ÷ 1.25 = ₹800; abnormal loss on 10 stolen bales = ₹9,000 (cost ₹8,000 + proportionate consignor expenses ₹1,000); 90 bales sold for ₹1,35,000; profit on consignment = ₹52,000.
>
> **Given:** 100 bales consigned, invoice price ₹1,000/bale (cost + 25% profit); consignor's expenses ₹10,000; 10 bales stolen in transit, insurance claim ₹8,000 accepted; cart hire paid by consignee ₹2,000; 90 bales sold @ ₹1,500/bale. Account to be at cost price.
>
> **Step 1 — Cost per bale:** Invoice price ₹1,000 = cost + 25% of cost = 1.25 × cost → cost = 1,000 ÷ 1.25 = **₹800**. Goods sent (at cost) = 100 × ₹800 = **₹80,000**.
>
> **Step 2 — Abnormal loss (10 bales stolen in transit):** valued at cost + proportionate consignor's expenses (expenses incurred on all 100 bales before the loss):
> - Cost of 10 bales = 10 × ₹800 = ₹8,000
> - Proportionate consignor's expenses = ₹10,000 × 10/100 = ₹1,000
> - Total abnormal loss = **₹9,000** (credited to Consignment A/c). Insurance claim ₹8,000 is received; net loss ₹1,000 goes to the Profit & Loss A/c. (Cart hire is a consignee expense on the 90 received bales and is not apportioned to the lost bales.)
>
> **Step 3 — Sales and closing stock:** 100 − 10 stolen − 90 sold = 0 bales left, so there is no closing stock. Sales = 90 × ₹1,500 = **₹1,35,000**.
>
> **Consignment Account (at cost price):**
>
> | Dr. | ₹ | Cr. | ₹ |
> |---|---|---|---| …

Trading and Profit & Loss Account of [Business Name] for the year ended [Date]
Particulars	Amount (₹)	Particulars
To Opening Stock	xxx	By Sales
To Purchases	xxx	Less: Sales Returns
Less: Purchase Returns	(xxx)	By Closing Stock
To Direct Expenses (Wages, Carriage, etc.)	xxx
To Gross Profit c/d	xxx
Total	xxx	Total

To Salaries	xxx	By Gross Profit b/d
To Rent & Taxes	xxx	By Commission Received
To Depreciation	xxx	By Discount Received
To Interest on Loan	xxx	By Miscellaneous Income
To Net Profit (transferred to Capital A/c)	xxx
Total	xxx	Total

Concept understanding — Meaning Of Financial Statements

Everyday Intuition

Precise Meaning (as per NCERT Class 12 Accountancy)

Why It Matters

Accounting Treatment: How They Are Prepared

Format: Trading and Profit & Loss Account (as per NCERT)

Part (a)

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