Multiple choice

Vinay of Ghaziabad invoiced goods of Rs. 5, 00,000 to Madhav of Pune, which included 20% profit on invoice price. Vinay spent Rs. 25, 000 as transit charges. Madhav spent Rs. 18, 000 as unloading charges and Rs. 20,000 as advertisement. He sold the damaged goods at Rs. 20, 000. His commission was 10% of sales price. The insurance company admitted a claim of Rs. 10, 000. Find the net abnormal loss debited to P&L account.

  1. Rs. 14, 500

  2. Rs. 12, 500

  3. Rs. 16, 500

  4. Rs. 26, 500
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Cost of invoiced goods = Rs. 4, 00,000 Cost of abnormal loss = 1/10th of 4, 00,000 = Rs. 40, 000

  • Proportionate expenses of Vinay                 = Rs. 2, 500
  • Proportionate expenses of Madhav              = Rs. 2, 000             (18,000/3, 60,000)*40,000
  • Commission charged by Madhav                 = Rs. 2, 000 Total net cost debited = Rs. 46, 500 Amount credited = 20,000 + 10,000 = Rs. 30, 000 Net Loss debited to P and L Rs. 16, 500 If Madhav's expenses or commission is ignored then loss is Rs. 14, 500. If both of these are ignored, loss is Rs. 12, 500 If insurance claim is ignored, loss is Rs. 26, 500

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