In order to determine the turnover on the sale of the package, a Package Stock Account is arranged which records the opening balance in the hand and with consumers plus the purchases made during the year on the debit side and packages sold, destroyed and scrapped together with the closing balance in the hand and with customers on the credit side.
Terms used in Containers Account
(1) Cost Price
The purchasing price or the manufacturing cost of the containers is referred to as cost price.
(2) Charged Out Price
A particular amount can be charged to the customers for the container, which is known as charged out price. The price is charged by the firm to its customers at the time of despatching the containers and may also be treated as selling price.
(3) Returnable Price
When a customer returns the returnable containers in good condition within a stipulated time, he/she will be refunded a certain amount which can be termed as returnable or refundable price. The price is credited by the firm on account of packages returned by the customers within the stipulated period (i.e., credit given price).
(4) Hire Charge
The difference between charged out price and the returnable price is known as hire charge. It is the difference between charged out price minus credit given rate (for packages on hire).
Hire Charge = Charged out the price- Returnable price
(5) Containers Retained (Sold)
The containers are sent to the customers with terms and conditions. The containers which are not returned by the customers and which are paid for may be treated as ‘sold’. If the customer fails to return the containers within the stipulated time, it will be treated as sold or retained by customers.
(6) Returnable Containers
The containers lying with the customers on the closing date of the accounting period are known as returnable containers. The containers which are lying in the hands of customers, and the stipulated period of which has not yet expired, are called ‘Returnable Packages’. For becoming returnable containers, the time limit of return should nor be expired on the closing date.