But when the cost of the container is a significant portion of total cost, the
charge of container is normally excluded in the price of product to allow the
seller to compete with other competitors.
The usual practice for such containers is that they are returnable in nature
and are return by the customers with terms and conditions, a major portion of
charge already taken from the customers, will be refunded to the customers.
Therefore, the difference between the charged out price for containers and the
refunded
price
is
known
as
'Hire
charges'.
Accounting Treatment
and Objective
The accounting treatments of containers will be depend upon the
policy of the individual concern.
Accounting for packages or containers is done to achieve the following
objectives;
1. To exercise control on movements of containers to ensure
that
main
The containers like tube of tooth paste, wrapper of chocolate, lubricants are
Amt
Particulars
By Cash/Bank A/c
(Scrap sold)
By Profit & loss A/c
(Depreciation)
By Profit & loss A/c
(Repairs)
By Trading
manufacturing a/c
By Balance C/d (closing
stock of containers at
cost)
Amt
Amt
Particulars
20000 By Bank
190000 By Profit & loss a/c
By Trading
manufacturing a/c
By Balancing
210000
Amt
5000
6000
174000
25000
210000
Amount
Particulars
To balance b/d
By bank
To purchases
By customer
a/c (charge at
containers
more than cost
)
By balance c/d
closing stock
of containers at
cost)
Amount
Particular
Amounts
Particular
Amounts
To balance b/d
55000
By bank
12000
To purchases
320000
10000
22000
By customers
a/c
315000
By balancing
60000
397000
397000
Containers returnable
Particular
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
Amounts
amounts
Particular
1 for purchase of containers by the firm
Containers trading accounts
Dr
To cash account
2
Amount
s
amounts