Answer to Question #303589 in Finance for Robert

Question

On 1 Jan 1998, the Katito Sand Co sent to M. Mutiso 1,000 tonnes of sand the pit cost being Sh100 per tonne. The company paid Sh10,000 towards freight and insurance. Mutiso took delivery of the consignment on 10th January 1998 and immediately accepted a bill drawn on him for Sh50,000 for 2 months. On 31st March (when the company’s books are closed) the consignee reported that:

i) There was a shortage of 50 tonnes on the whole consignment due to loading and unloading;

ii) 800 tonnes were sold at sh130 per tonne

iii) He had incurred the following expenses:

- Godown rent Sh500

- Insurance Sh500

- Selling expenses Sh1,000

iv) He had deducted his commission (4% of sales) and remitted the balance due by bank draft on 31 March 1998.

Required: Show the necessary accounts in the books of Katitu Sand Co. to record the above transactions.

Answer 1

ANSWER :