Stores - Objective type questions

    

Stores - Objective type questions

Stores Manual of Southern Railway

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Stores manual of Southern Railway

JOURNAL/ACCOUNTING ENTRIES FOR SCRAP SALES OF RETURNED STORES

JOURNAL/ACCOUNTING ENTRIES FOR SCRAP SALES OF RETURNED STORES

Codal provisions:

Para 27 of chapter 29 of Stores Code (S-2927)

 Sales (Capital 7140 and 7150).

I.In the case of cash sales, auction sales or sales by tender where the value of material sold by the Railway is received in advance of actual issue of stores, the credit to this account will appear earlier than the debit. The credit will be by debit to 'Cash'.

(So Sales Suspense A/c is always showing credit balance.  Because Credit appear first in Sales Suspense A/c by debiting the Remittance Into Bank A/c (RIB) .

Example : Rails released from CTR (Complete Track Renewal) work - Journal Entries

STAGES/STEPS

I. On receipt of released material at Scrap Depot   - CJV - Capital Journal Voucher

Date	Particulars	Ledger folio	Debit(Rs)	Credit (Rs.)
	Stores in stock A/c  207161-08 -  Dr		100
	To Demand No.16 PH 3100 ( 21-3100) Cr			100
	Credit to work at Book value for the released material by taking debit in Stores Suspense A/c

2. When EMD (Earnest Money Deposit) & BSV (Balance Sale Value) received from the successful bidder  - MCR

Date	Particulars	Ledger folio	Debit(Rs)	Credit (Rs.)
	Remittance into Bank A/c 008677-88 Dr		90
	To Sales Suspense A/c 207142           Cr			90
	On receipt of MCR for EMD/BSV paid by the successful bidder

3. At the time of delivery of material to successful bidder and adjust the difference between Book value and realised value of released materials through Stock Adjustment A/c (SA A/c)    - CJV - Capital Journal Voucher

Date	Particulars	Ledger folio	Debit(Rs)	Credit (Rs.)
	Sales suspense A/c  207142 Dr		90
	Stock Adjustment A/c 20-7185 Dr		10
	To Stores in Stock A/c 207161-08   Cr			100
	On receipt of Issue note for having delivered the material

4. Clearance of Stock Adjustment A/c (SA A/c) by adjusting debit or credit to the Dept/Demand. - CJV -Capital Journal Voucher

Date	Particulars	Ledger folio	Debit(Rs)	Credit (Rs.)
	Demand No.16 –PH 3100 (21-3100)   Dr		10
	To Stock Adjustment A/c 20-7185        Cr			10
	Clearance of SA A/c by adjusting to the Final Head

Left over of journal entries, after cancel out/nullify the Stores in stock A/c, Sales Suspense A/c & Stock Adjustment A/cs one to one i.e., by equaling Debits/Credits

Date	Particulars	Ledger folio	Debit(Rs)	Credit (Rs.)
	Remittance into Bank (RIB) A/c           Dr		90
	Demand No.16 –PH 3100 (21-3100)   Dr		10
	To Demand No.16 –PH 3100 (21-3100)   Cr			100

PS: Candidates are advised to furnish the journal entries wherever required /possible to obtain  good scoring in examination.

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Variety Reduction

VARIETY REDUCTION

·         is nothing but standardization of items/materials.

·         The basic purpose of standardization is to eliminate diversity among items/materials that serve the same purpose and to attain a high degree of uniformity in the manufacture. 

·         is a rationalization of the number of items to be stocked. It achieves by elimination of non-standard and non-rationalized sizes/designs whose demand is very small.

·         enables few items will be purchased in large quantities.

·         It is an essential requirement to any modern mass production economy such as Indian Railways.

ADVANTAGES:

1.       Reducing the Unit cost, because few items will be purchased in large quantities.

2.       Reducing the inventory carrying cost.

3.       Will root out the unneeded and duplicate items.

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Repeat Orders

Repeat Orders

·         When materials are required during a contract period in excess of the quantities contracted for,

·         And such excess is not sufficiently large to justify the invitation of fresh tenders,

·         Then, increasing the quantities suitably under the existing contract is called Repeat Order.

·         However, before placing repeat order, negotiations should be conducted with the supplier for securing the favourable terms.

·         No such Repeat orders to be placed on previously accepted rates obtained on limited or single tenders.  That means, Repeat orders to be placed only in case of open tenders.

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