PROBLEM - 3

Wali sent 1000 lbs. of certain chemicals to Ahmed to be sold on consignment basis. The terms were that Ahmed would get 5% commission plus 2% del credere commission and would be reimbursed for expenses incurred.

The cost to Wali was Tk. 25 per lb. He incurred Tk.200 as packing and forwarding charges. On receipt of the chemicals Ahmed accepted a bill for Tk. 15000. Ahmed also paid Tk.500 as freight and cartage and Tk.300 as rent and insurance.

Ahmed sold 750 lbs. at Tk.35 per lb. One third of total sales were on credit. One customer failed to pay the amount of Tk.1000 due from him. Ahmed remitted the due amount to Wali.

Requirements:

1. Give the journal entries in the books of Wali and Ahmed.
2. Show the Consignment Account and Ahmed’s Account in the books of Wali and various important ledger accounts in the books of Ahmed.