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 Benji's 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]