Mahesh of Mumbai consigned goods of the cost of ₹20,000 to Balaram of Bangalore. The consignor paid freight ₹1,000 and insurance ₹500 and received an advance of ₹10,000 by cheque f... Mahesh of Mumbai consigned goods of the cost of ₹20,000 to Balaram of Bangalore. The consignor paid freight ₹1,000 and insurance ₹500 and received an advance of ₹10,000 by cheque from Balaram. The consignee paid carriage ₹300 and octroi ₹200. He sold all the goods for ₹30,000 and sent an account sales. He also sent a cheque to Mahesh for the amount due after deducting his expenses along with a commission at 10% on the gross sale proceeds. Calculate the amount of the cheque.
Understand the Problem
The question describes a consignment arrangement where Mahesh of Mumbai sends goods to Balaram of Bangalore. It provides various costs incurred by both the consignor (Mahesh) and the consignee (Balaram), including freight, insurance, carriage, and octroi. Balaram sells the goods and sends a cheque to Mahesh after deducting expenses and commission. We need to determine the amount of the cheque sent by Balaram to Mahesh. This requires a step-by-step calculation of expenses, commission, and the final amount due.
Answer
₹16,500
Answer for screen readers
The amount of the cheque sent by Balaram to Mahesh is ₹16,500.
Steps to Solve
- Calculate Consignor's Expenses
Freight paid by Mahesh: ₹1,000 Insurance paid by Mahesh: ₹500 Total Consignor Expenses = Freight + Insurance Total Consignor Expenses = $1000 + 500 = 1500$
- Calculate Consignee's Expenses
Carriage paid by Balaram: ₹300 Octroi paid by Balaram: ₹200 Total Consignee Expenses = Carriage + Octroi Total Consignee Expenses = $300 + 200 = 500$
- Calculate Commission
Gross sale proceeds: ₹30,000 Commission rate: 10% Commission = 10% of Gross Sales Commission = $0.10 \times 30000 = 3000$
- Calculate Total Deductions by Consignee
Total Deductions = Consignee Expenses + Commission Total Deductions = $500 + 3000 = 3500$
- Calculate Total Amount Due to Consignor Before Advance
Gross sales: ₹30,000 Total amount before advance = Gross Sales - Total Deductions Total amount before advance = $30000 - 3500 = 26500$
- Calculate the Final Amount Sent by Consignee
Advance received by Mahesh from Balaram: ₹10,000 Final Amount = Total Amount Before Advance - Advance Final Amount = $26500 - 10000 = 16500$
The amount of the cheque sent by Balaram to Mahesh is ₹16,500.
More Information
The consignment arrangement involves one party (the consignor) sending goods to another party (the consignee) who sells them on behalf of the consignor. The consignee remits the proceeds to the consignor after deducting expenses and commission.
Tips
A common mistake is forgetting to deduct the advance amount already received by the consignor from the consignee. Another mistake is miscalculating the commission or the expenses incurred by either party. Ensure all values are correctly substituted during calculations to avoid errors.
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