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Returnable Containers Accounting Overview

Delta Company Limited sells returnable containers, purchasing them at sh. 200 each and charging customers sh. 250 per container. The document outlines transactions for the year, including purchases, returns, scrapping, and repairs, culminating in a profit statement showing a net profit of sh. 26,834,000. Additionally, it includes detailed accounts for container stock and suspense accounts.

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67 views3 pages

Returnable Containers Accounting Overview

Delta Company Limited sells returnable containers, purchasing them at sh. 200 each and charging customers sh. 250 per container. The document outlines transactions for the year, including purchases, returns, scrapping, and repairs, culminating in a profit statement showing a net profit of sh. 26,834,000. Additionally, it includes detailed accounts for container stock and suspense accounts.

Uploaded by

tianoyaa
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Returnable containers Illustration

Delta company limited sells goods in containers which are returnable. These containers are purchased
by the company at sh. 200 each per container. The containers are written valued at sh. 150 for stock
taking.

The containers are charged to customers at sh. 250 per container and credited at sh. 180 once returned.
At 1.1.2021, 40,000 containers were in the premises of the company and 10,000 containers with the
customers. During the year the following transactions took place.

[Link] purchased were 20,000

2. containers scrapped were 5,000 and sold for sh. 4,000

3. repair cost was sh. 20,000 for damaged containers

4. 400,000 containers were issued to customers

5. 360,000 containers were returned by customers

6. 20,000 containers were permanently kept by customers

7. 30,000 containers were in custody of customers awaiting return

8. A physical check of those held by Delta showed no discrepancy at year end

Required

Prepare

(a) Container stock account


(b) Container suspense account
(c) A statement showing the profit on containers (20 marks)

Solution

Dr. Container stock Account Cr.

Date Particular Quantit Rat Amount Dat Particular Quanti Rate Amount
s y ‘000’ e e s ty
‘000’
Ksh. Ksh.’000 Ksh. Ksh.’000’
’ ’000’
1.1.202 Balance
1 b/d:
At 40 150 6000 Scraped 5 - 4
premises
With 10 150 1500 container - - 28,000
customer suspense
s a/c
Hire
charges
(250-180)
400,000
Purchases 20 200 4,000 31.1 Container 20 180 3,600
2.20 suspense
21 A/c
Kept by
customer
Repair 20 31.1 Bal. c/d
2.20
21
Profit & 26,834 At 15 150 2,250
Loss premises
Profit on
usage of
container
s
With 30 150 4,500
customer
s
70 38,354 70 38,354

(b) container suspense Account

Date Particulars Quantity Rate Amount Date Particulars Quantity Rate Amount
“ ‘000’
‘000
Ksh. Ksh.’000’ Ksh. Ksh.’000’
Customers 360 180 64,800 1.1.2021 Balance 10 180 1,800
a/c b/d with
Containers customers
Returned
by
customers
Container 20 180 3,600 Customer 400 250 100,000
stock A/c a/c
Kept by Container
customers charged
to
customers

Hiring 28,000
profit
Bal. c/d 30 180 5,400
101,800 101,800
A statement showing the profit on containers

Hire charges (250-180) 400,000 sh. 28,000,000


Kept by customers 20,000 x (180-150) sh. 600,000
28,600,000
Less depreciation (200-150) x 20,000 Ksh. 1,000,000
Cost of repairs Ksh. 20,000
Loss on disposal Ksh. 4,000 – (5,000 x 150) Ksh. 746,000
1,766,000)
Net profit 26,834,000

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