Goods sent out on consignment 200000 consignors expenses 5000 consigne...
Profit on Consignment
Introduction: In this question, we have been given certain details related to a consignment transaction. Our task is to calculate the profit on consignment.
Calculation of Profit on Consignment:
1. Calculation of Total Sales:
- Cash Sales = Rs. 100,000
- Credit Sales = Rs. 110,000
- Total Sales = Rs. 210,000
2. Calculation of Cost of Goods Sold:
- Consignment Inventory = Rs. 40,000
- Goods sent out on Consignment = Rs. 200,000
- Cost of Goods Sold = Rs. 240,000
3. Calculation of Gross Profit:
- Gross Profit = Total Sales - Cost of Goods Sold
- Gross Profit = Rs. (210,000 - 240,000)
- Gross Profit = Rs. (-30,000)
4. Calculation of Expenses:
- Consignor's Expenses = Rs. 5,000
- Consignee's Expenses = Rs. 2,000
- Ordinary Commission Payable to Consignee = Rs. 3,000
- Del credere Commission = Rs. 2,000
- Total Expenses = Rs. 12,000
5. Calculation of Net Profit:
- Net Profit = Gross Profit - Expenses
- Net Profit = Rs. (-30,000 - 12,000)
- Net Profit = Rs. (-42,000)
Explanation:
The given details indicate that the consignment transaction has resulted in a loss of Rs. 42,000. This is because the cost of goods sold is higher than the total sales. In addition, the expenses incurred are also higher than the gross profit. Therefore, the net profit is negative.
Conclusion:
In conclusion, the calculation of profit on consignment requires the determination of total sales, cost of goods sold, gross profit, and expenses. Based on the given details, the consignment transaction has resulted in a loss of Rs. 42,000.
To make sure you are not studying endlessly, EduRev has designed CA Foundation study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in CA Foundation.