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Zorluk: OrtaValuation and Accounting Treatment of Unsold Consignment Stock

Adeola dispatched 400400 bags of rice costing ₦25,000\text{₦}25,000 per bag to Musa on consignment. Adeola paid freight of ₦500,000\text{₦}500,000 and transit insurance of ₦300,000\text{₦}300,000. Upon receiving the goods, Musa paid clearing charges of ₦200,000\text{₦}200,000, godown rent of ₦150,000\text{₦}150,000, and sales promotion expenses of ₦100,000\text{₦}100,000. At the end of the trading period, Musa had sold 300300 bags of rice.

Calculate the total value of the unsold consignment stock in Naira (₦\text{₦}).

Cevap: 2750000 ₦

Cevap

The total value of the unsold consignment stock is ₦2,750,000.
The total value of unsold consignment stock is calculated as the basic cost of the unsold 100 bags (₦2,500,000), plus 25% of the consignor's total freight and insurance expenses (₦200,000), plus 25% of the consignee's direct non-recurring clearing charges (₦50,000). This yields ₦2,750,000. Recurring expenses like godown rent and sales promotion are excluded.

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1
Determine the quantity of unsold stock and the proportion remaining.
Unsold bags = 400−300=100400 - 300 = 100 bags. Proportion unsold = 100400=14\frac{100}{400} = \frac{1}{4} or 25%25\%.
Stock valuation is performed on the remaining inventory at the close of the period.
2
Calculate the basic cost price of the unsold stock.
Basic cost = 100 bags×₦25,000=₦2,500,000100 \text{ bags} \times \text{₦}25,000 = \text{₦}2,500,000.
Unsold inventory is initially measured at its original purchase cost.
3
Calculate the proportionate share of the consignor's non-recurring expenses.
Consignor expenses share = 14×(₦500,000+₦300,000)=₦200,000\frac{1}{4} \times (\text{₦}500,000 + \text{₦}300,000) = \text{₦}200,000.
All freight and insurance costs incurred by the consignor to ship goods are direct non-recurring expenses and must be capitalized into inventory value.
4
Identify and add the proportionate share of consignee's direct non-recurring expenses.
Consignee non-recurring share = 14×₦200,000=₦50,000\frac{1}{4} \times \text{₦}200,000 = \text{₦}50,000.
Clearing charges are direct non-recurring costs required to bring goods into the consignee's possession. Godown rent (₦150,000) and sales promotion (₦100,000) are recurring selling costs and are excluded.
5
Sum the basic cost and all proportionate direct non-recurring expenses.
Total valuation = ₦2,500,000+₦200,000+₦50,000=₦2,750,000\text{₦}2,500,000 + \text{₦}200,000 + \text{₦}50,000 = \text{₦}2,750,000.
Unsold stock is valued at cost plus proportionate non-recurring expenses incurred in bringing the goods to their present location.

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Valuation and Accounting Treatment of Unsold Consignment Stock
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