CMA Foundation · Fundamentals of Financial and Cost Accounting · Consignment
Roy Enterprises consigns goods at cost plus 50%. Goods with an invoice price of ₹9,000 are lost abnormally in transit. At what amount should the abnormal loss be debited to the Abnormal Loss account, before any insurance claim?
The abnormal loss is debited at ₹6,000. Goods are invoiced at cost plus 50%, so one-third of the invoice price is loading. The ₹9,000 invoice price therefore contains ₹3,000 loading, and the loss must be shown at cost, which is ₹6,000.
- A₹3,000
- B₹4,500
- C₹6,000Correct
- D₹9,000
Explanation
Loading is 50/150 = one-third of invoice price. Loading in the lost goods = 3,000. The loss is taken at cost: 9,000 − 3,000 = ₹6,000. ₹4,500 wrongly takes 50% of the invoice price as loading.
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