branch accounting

[blue sun]

please solve this question.
The Branch of Ilsa Company is billed for merchandise by the home office at 20% above cost.The branch in turn prices merchandise for sales purpose at 25% above billed price.On January 17 all of the branch merchandise is destroyed by fire.No insurance was maintained. Branch accounts show the following information.
open. inventory Jan 1 ( at billed price) Rs26400
shipment from head office(Jan 17) 20000
sales 15000
sales return 2000
sales Allowances 1000
What was the cost of merchandise destroyed?

[aamalik]

Stock A/C in Debtor & Stock System is your answer buddy, try making it...

[blue sun]

koi to solve kar k batao.entry nahi cahaiye.

[faisal_desperado]

Dear,

Total goods available for sale---- 46,400 ( At billed Price)<b>*</b>
Less Goods sold------------------ 10,400 ( At billed price)<b>**</b>

Goods still available to be sold--------36,000 ( At Billed Price)

Since goods are billed at 20% above cost, so cost for head office will be; 36,000 *100/120 = 30,000.
<b>
Cost of Merchandise Lost by Fire = Rs. 30,000</b>


<b>*</b>Total inventory available for sale is Rs.46,400 (i.e.26,400+20,000).

<b>**</b>Net sales is Rs. 13,000 (15000-2000, Rs. 1,000 is allowance, which will be ignored for the purpose of calculation), which is 25% above billed price, since merchandise are sold at 25% above billed price so the same must be deflated to billed price for the purpose of compatibility with that of merchandise available for sales(which is at billed price).
So, Billed price of merchandise sold will be Rs. 10,400(i.e.13000*100/125).


Let me know if confusion still exists.


Best Regards,

Faisal.

[blue sun]

mujhe sale allowance ka samjh nahi aya.sale discount aur sale allowance to less karte hein hein sales se.