PACKAGES AND CONTAINERS

Container or package is anything in which Container or package is anything in which product is packed for sale. It may be a product is packed for sale. It may be a packet, bottle tube drum cylinder jar or packet, bottle tube drum cylinder jar or any other item. Packet or container may any other item. Packet or container may be of two type , viz.. primary or be of two type , viz.. primary or secondary. The former related to those secondary. The former related to those packages which forms type of products. packages which forms type of products. The cost of such containers is included The cost of such containers is included in the cost of the product. The other type in the cost of the product. The other type related to those containers which are related to those containers which are required for distribution of goods to the required for distribution of goods to the customers. Such types of containers are customers. Such types of containers are usually Returnable to the seller within a usually Returnable to the seller within a stipulated period of time by the buyer.stipulated period of time by the buyer.

Accounting treatment

… … to exercise control on movements of containers to exercise control on movements of containers to ensure that containers are properly returned to ensure that containers are properly returned by customers and due credit is given to them are by customers and due credit is given to them are charged separately. charged separately.

B…. To see that there is no misappropriation of B…. To see that there is no misappropriation of containers.containers.

C…. To find out profit or loss on containers C…. To find out profit or loss on containers separately from the main product when a separately from the main product when a separate charge is made for containers.separate charge is made for containers.

The accounting treatments of containers will be The accounting treatments of containers will be depend upon the policy of the individual concern.depend upon the policy of the individual concern.

Accounting for packages or containers is done to Accounting for packages or containers is done to achieve the following objectivesachieve the following objectives

Containers non-returnable

When a separate charge is not When a separate charge is not mademade

1 When a separate charge is not made 1 When a separate charge is not made

The charge for the containers in this case will The charge for the containers in this case will be included in the sale price of the goods. A be included in the sale price of the goods. A containers stock account should be kept containers stock account should be kept which will be debited with opening stock of which will be debited with opening stock of containers and purchases and credited with containers and purchases and credited with closing stock, the balance being the closing stock, the balance being the expenses of containers during the period of expenses of containers during the period of the accounts is written off as distribution the accounts is written off as distribution expense to the profit and loss account expense to the profit and loss account

CONTAINERS STOCK ACCOUNT (when containers are not returnable and no

separate charge is made)

CONTAINERS STOCK ACCOUNT (when containers are not returnable and no separate charge is

made)

Particulars Amount Particulars Amount

To balance b/d By bank

To purchases By profit & loss a/c

By trading manufacturing a/c

By balance c/d (closing stock of containers at cost)

Prepare containers stock accounts from information

opening stock – 20000purchases – 190000

sale of containers scrapped -5000cost of container lost due to fire -6000

containers in hard - 25000

Prepare containers stock accounts from information opening stock – 20000

purchases – 190000sale of containers scrapped -5000

cost of container lost due to fire -6000containers in hard - 25000

Particular Amounts Particular Amounts

To balance b/d 20000 By bank 5000

To purchases 190000 By profit & loss a/c

6000

By trading manufacturing a/c

174000

By balancing 25000

210000 210000

When separate charge is madeWhen separate charge is made

When separate charge is made –The charge for the containers in this case will The charge for the containers in this case will

be included in the sale price of the goods. A be included in the sale price of the goods. A containers stock account should be kept containers stock account should be kept which will be debited with opening stock of which will be debited with opening stock of containers and purchases and credited with containers and purchases and credited with closing stock, the balance being the closing stock, the balance being the expenses of containers during the period of expenses of containers during the period of the accounts is written off as distribution the accounts is written off as distribution expense to the profit and loss account expense to the profit and loss account

CONTAINERS STOCK ACCOUNT (when containers are not returnable and separate charge is made)

CONTAINERS STOCK ACCOUNT (when containers are not returnable and separate charge is

made)

Particulars Amount Particulars Amount

To balance b/d By bank

To purchases By profit & loss a/c

To profit & loss a/c By customer a/c (charge at containers more than cost )

By balance c/d closing stock of containers at cost)

QUESTION -Prepare containers stock accounts from information

opening stock – 55000purchases – 320000

sale of containers scrapped -12000cost of container lost due to fire -10000

containers in hard – 60000charged on customer -315000

Prepare containers stock accounts from information opening stock – 55000

purchases – 320000sale of containers scrapped -12000

cost of container lost due to fire -10000containers in hard – 60000

charged on customer -315000

Particular Amounts Particular Amounts

To balance b/d 55000 By bank 12000

To purchases 320000 By profit & loss a/c 10000

To profit & loss 22000 By customers a/c 315000

By balancing 60000

397000 397000

Containers returnable

When a separate charge is not When a separate charge is not mademade

• The double entry book keeping will be similar to that

• Except that opening and closing stock will be divided between containers in the warehouse and those in the hand of the customers stock must be brought into the accounts in cost less adequate depreciation

• Following journal entries are passed

Particular Amounts amounts

1 for purchase of containers by the firm Containers stock accounts Dr To cash account

2 When goods are sold in containers customers account Dr To sales accounts

3 When goods are returned sales return accounts Dr To customers account

4 When containers are repaired Containers stock accounts Dr

To cash account

5 container lost due to fire profit and loss account Dr To Containers stock accounts

6 Depreciation on containers profit and loss account Dr To Containers stock accounts

When a separate charge is When a separate charge is mademade

• Container or package is anything in which Container or package is anything in which product is packed for sale. It may be a product is packed for sale. It may be a packet, bottle tube drum cylinder jar or packet, bottle tube drum cylinder jar or any other item. Packet or container may any other item. Packet or container may be of two type , viz.. primary or be of two type , viz.. primary or secondary. The former related to those secondary. The former related to those packages which forms type of products. packages which forms type of products. The cost of such containers is included The cost of such containers is included in the cost of the product. The other type in the cost of the product. The other type related to those containers which are related to those containers which are required for distribution of goods to the required for distribution of goods to the customers. Such types of containers are customers. Such types of containers are usually Returnable to the seller within a usually Returnable to the seller within a stipulated period of time by the buyer.stipulated period of time by the buyer.

• Following journal entries are passed

Particular Amounts amounts 1 for purchase of containers by the firm Containers trading accounts Dr To cash account

2 When goods are sold in containers customers account Dr To containers trading accounts

3 When goods are returned sales return accounts Dr To customers account

4 When containers are repaired Containers trading accounts Dr

To cash account

5 container lost due to fire profit and loss account Dr To Containers trading accounts

6 Depreciation on containers profit and loss account Dr To Containers trading accounts

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