Accounting for Special Transactions

 The party that sends goods (Consignor) is called Principal and the party that receives goods (Consignee) is called Agent. Hence, relationship between Consignor and Consignee is that of Pricipal and Agent.

 Normal Loss is unavoidable, Abnormal Loss occurs when something accidental or unnecessary occurs.

Amount to be transferred to General trrading account from Goods sent on Consignment A/c would be after removing loading.Thus, General Trading a/c would be credited with Rs (1,20,000-20000) = Rs 1,00,000

 Joint Bank is a method of joint Venture where separate sets of books are maintained and Memorandum method is a method of Joint Venture where separate set of books is not maintained. There is no method of Joint venture called Columnar Method.

 No of Parties involved in Consignment as well as Sales transaction is 2.

 Where Separate sets of books are maintained, all the expenses are to be recorded in Memorandum A/c

 Accounting entry for loss :Co-Ventures Account    Dr
             To Joint Venture a/c
 

 There is no specific act governing Joint venture transactions.

 One-Third of Cost is One-Fourth of SalesCost                       = 100
Loading                =(33-1/3
Invoice Price        =100+ 33-1/3
Percentage of Loading to Invoice price = {(33-1/3)/100+ 33-1/3}*100
                                                                      =25

 A bill of exchange is a written document.

 Accounting entry for expenses incurred out of Joint Bank a/c

Joint Venture A/c      Dr
     To Joint Bank a/c

 Purchase Consideration of land for Joint Venture = Rs20,000
Sale Consideration                                                       = Rs 60,000

Profit                                                                                =Rs (60000-20000)
                                                                                         =Rs 40,000

 Only a creditor can draw a bill of exchange on its debtor. Going by the definition of Bill of Exchange, a person promises to pay money after some specific time and to make the same valid, it must be accepted by the debtor.

 A's owes B Rs 15,000 for mutual accomodation. (30,000/2)
Thus, A will remit Rs15000 to B on due date.

 Crossed cheque is not a negotialble instrument. A crossed cheque is maked to specify an instruction about the way it is to be redeemed and it cannot be negotiated.

Bill is drawn on net amount receivable.
Net Amount receivable     =Rs (1,00,000-5,000)
                                              =Rs 95,000      

 If a discounted cheque gets dishonored, bank collects the amount of bill as well as noting charges from A.
Thus, Amount to be deducted                       =Rs (20000+20)
                                                                            =Rs 20,020

Purchase price of 100 kg rice              =Rs 2,000

• Brokerage paid                                   =Rs 200
  +Carriage Paid                                       =Rs 300
  Total Cost of 100 kg rice                       =Rs 2500
  Cost of 1kg Rice                                     =Rs 25
  Rice taken over by B                              = 10 kgs
  thus,Cost of rice taken over by B                 =Rs (25*10)
                                                                    = Rs 250 

 A bill of excange is a
              written document
              containg a conditional undertaking
              to pay a certain amount to the bearer

 The custmer will debit the purchase account on acceptance of goods sent on approval and credit the Suppliers a/c.

It is customarily followed that interest from the date of closing to its due date is written in Red Ink, hence called Red- Ink Interest.

Unlike Bill of Exchange, a Promissory note does not require any acceptance since it is signed by the persons who is liable to pay.

 Noting charges are to be borne by B
Total Amount payable by B after dishonor = Rs 1,01,000
Discount Amount                                            = Rs (2% of 1,01,000)
                                                                           = Rs 2020
Net amount payable by B                             = Rs (101000-2020)
                                                                           = Rs 98,980

 Journal entry on acceptance of goods sent on approval by the customer :
      Sale on approval Basis a/c      Dr
                    To Sales a/c