Question
Aleksander is a trader with a financial year end of 30 June. He buys containers of sunflower seeds for $100 each. Some of these he
Aleksander is a trader with a financial year end of 30 June. He buys containers of sunflower seeds for $100 each. Some of these he ships to his agent Benji in northern Europe. He pays Benji a commission of 10% of sales value. The following information is available: 1 On 2 April 2017 Aleksander sent 200 containers to Benji. Aleksander paid packing costs of $120 and freight costs of $6080. 2 Benji paid additional freight costs of $1600 for transport from the port to his warehouse. 3 In the period to 30 June 2017 Benji sold 160 containers for $170 each. He remitted $21 000 to Aleksander on 14 June. REQUIRED (a) Prepare the following ledger accounts in the books of Aleksander for the 3 months ended 30 June 2017. (i) goods on consignment account [2] (ii) consignment account [12] (iii) Benji account [5] Additional information The government in Benjis country decided to introduce import duties from 1 July 2017 which amount to $20 per container. REQUIRED (b) Explain how Aleksander might have dealt with this increase in cost. Support your answer by considering the effect on the profit per container. [4] (c) State why an advertising campaign paid for by an agent would not be included in the valuation of inventory. [2] [Total: 25]
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