Jazel Business services sells its goods in containers which are returnable. These containers are purchased by the company at Sh.20 per container but each container is written down to the book value of Sh.15 per container immediately it is purchased. For stock taking purposes all containers are valued Sh.15 per container irrespective of whether they are still in stock or in the hands of customers. Containers are charged out to customers at Sh.25 per container, but the customer is credited with Sh.18 per container if it is returned in good condition within three months of receipt.

The following information relates to the year ended on 31st March 2018

(i) .Stock at 1.4.2018

Premises: 10,000

Customers: 2,000

(ii). During the year 15,000 containers were purchased

(iii). 40,000 containers were returned by customers within the time limit

(iv) .3,000 containers were not returned by customers within the time limit.These were considered as kept by the customers permanently.

(v) .1,000 containers were scrapped and sold for Sh.3,000

vi) Shs.7,000 were spent on the repair of the containers.

(vii) On 31st March 2003, 4,000 containers were in the possession of customers.

Required:

Prepare container stock and suspense account for the year ended 31st March 2003 and find the profit or loss made on containers

Answer rating: 100% (QA)

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