NAME: AIFUWA HOPE OSAYANTIN
PHONE NO : +2348136751972, PIN – 269B7BC0, 7BEB93E6
EMAIL – aifuwahopeosayantin@yahoo.com
WEBSITE – aifuwahopeosayantin.blogspot.com

TABLE OF CONTENTS
PAGES
I. Abstract of the subject matter 2 II. Objectives 3 III. Scope of the study 3 IV. Introduction 4 V. Illustrations and Suggested solution 11 VI. Illustration and Suggested solution (Without Retained crates and closing balance on premises) 14 VII. Purpose of keeping separate accounts for containers 18 VIII. Uses of Container accounts 18 IX. Recommendations 19 References 20

1.1. OBJECTIVES
This paper is intended to educate the audience on the following: * To know the nature of Containers and the general background; * To know the operation, accounting arrangements and application of container; * Terminologies and accounting entries of Container account; * Account required and formats of Container accounts; * Illustrations on Container accounts with or Without Retained crates and closing balance on premises; * Simple calculation of profit & loss on Container accounts; * Purpose of keeping separate accounts for container

1.2. SCOPE OF THE STUDY
This study will take a deep look into Container account which is one of the miscellaneous accounts in Accounting, i.e. also called accounting practice for specialized transactions which is popularly used by Bottling Companies.

2.0. INTRODUCTION
2.0.1. THE NATURE OF CONTAINERS
A container is anything in which goods are contained. This may consist of a packet containing cigarettes, a large wooden crate containing tractor parts, or a liquid gas cylinder. Some will be returnable by the purchaser after use, an obvious example being the gas cylinder, while others such as the cigarette packet will be disposed of at will by the customer. The returnable containers will often be subject to a deposit being charged to the customer, a refund being allowed when the container is returned in good condition to the supplier. In suppliers’ books it is therefore convenient to divide containers into those which are (1) not chargeable to the customers, and (2) those where a deposit charge is made to the customer.

2.0.2. GENRAL BACKGROUNG
1.0. For many products some sort of packaging is essential. Items of food are usually put into bags or wrappers or tins as appropriate. Cigarettes are put into packets; paint and motor oil are sold in metal or plastic cans.
1.1 Certain other products require much stronger containers. Acid is stored and transported in a non-corrosive (usually glass) carboy, radio-active materials in special casks.
2.0.3. OPERATING ARRANGEMENTS Containers of the types mentioned above may or may not be re-usable.
2.0. The packaging of those items mentioned in 1.0 cannot be re-used and is thrown away by the customer when the product which it is protecting is used up. 2.1. The more substantial and expensive produced containers of the type referred to in 1.1. can usually be re-used and are returnable to the manufacturers or suppliers, when empty.

2.0.4 ACCOUNTING ARRANGEMENTS & APPLICATIONS
3.0 The accounting treatment of containers regarded as expendable is different from the treatment of those which are not.
3.1 Primary packaging which is in effect an integral part of the product, as in 1.0, and which is discarded when the product is used up, constitute part of the manufacturing cost of that product and forms part of the cost of sales figure of the manufacturer.
3.2 Re-usable secondary packages, for example, crates and primary packaging instanced in
1.1. are treated as a distribution cost if not returned to the manufacturer of supplier.
3.3 In that instance, where the manufacturer or supplier is eager for the container to be returned, a deposit is invariably imposed on the customer. This is refundable is full or in part, according to the condition of the container. If returned.
3.4 From 3.3 it is apparent that the manufacturer or supplier must keep records showing containers brought , lost, damaged, scrapped, and In stock and records showing deposit receivable, refunded and refundable.
3.5 The necessary accounting entries could all be made within a single container. Preferably, however, for greater clarity, two accounts should be opened as follows, each with separate columns for quantities, unit value and total amounts.
3.6 Containers Stock to record container bought scrapped retained by customers and in stock. Containers in customers’ hands but capable of being returned are regarded as stock but distinguished from the stock available for dispatch to customers. Sum written off the values of containers are also passed through this account.
3.7 Containers Suspense to record opening and closing refundable deposits, deposits receivable, funded and forfeited (through non-return), sums written of the value of containers, and expenses such as repair cost.
3.8 When period ends accounts are prepared, the derived figure of profit or loss on container transferred to profit and loss account, whilst the closing balance, representing refundable deposit appears partly or wholly, as appropriate, as a deduction from Debtors or as Creditors. The closing balance on Container Stock is included in Stock.

2.0.5. TERMINOLOGIES 1. Purchase Price (PP): This is the Price at which the issuers of containers purchase them. 2. Charged-out-price (COP): This is the price at which containers are issued out to the customers. The containers should be returned within the specified or agreed time. 3. Credit-back-price (CBP): This is the price at which customers will be credited back (refunded) provided containers are returned within the stipulated period. 4. Valuation price (VP): This is the price at which the containers are included in the stock. To take care of depreciation. Valuation price is normally less than purchase price. 5. Profit on hiring: This is the excess of charged-out price over the Credit-back-price multiplied by the number of containers invoiced to customers. 6. Profit on container retained by customers: This is the excess of credit-back-price over the valuation price multiplied by the number of container retained by the customers. 7. 11In a particular question number of containers retained by customer (i.e. those containers not returned within the stipulated period) may not be given. This is computed as follows: Units Units
Bal. b/d
: with customers XX
Invoiced during the period XX XXX Container Returned XX Bal. c/d
: with customers XX (XX)

Number of container Retained by customers XXX

If the closing balance in the hands of customer is not given, this is computed thus: Units Units
Bal. b/d
: with customers XX
Invoiced during the period XX

XXX
Container Returned XX
Container Retained XX (XX)
Bal. c/d : with customers XXX

In the container stock, record will be taken as touching containers in the factory’s warehouse and in the hands of the customers. At times, the closing balance in the warehouse may not be given; this will be the balancing figure having known the number of containers with customers at the period. This can be computed thus;

Units Units
Bal. b/d
: on premises XX
: with customers XX
Purchase during the period XX XX
Containers destroyed XX
Containers scrapped XX Containers retained by customers XX Bal. c/d.
: with customers XX (XX)

: on premises XXX

2.0.6. ACCOUNTING ENTRIES A. Dr. Container stock a/c Cr. Cash/Bank a/c (with purchase price) B. Dr. P&L on containers Cr. Container stock a/c (with depreciation value i.e. the difference between valuation price and purchase price MULTIPLIED by the net numbers of container purchased) C. Dr. Suppliers a/c Cr. Container stock a/c (with containers returned to suppliers) D. Dr. P&L on containers Cr. Containers stock a/c (with containers destroyed/ scrapped at valuation price) E. Dr. Cash/bank a/c Cr. Containers stock a/c (with the proceed realized from container disposed off) F. Dr. Containers Sent to customer a/c ( at the charge out price) Cr. Container suspense a/c (at the credit back price) Cr. P&L a/c (with the profit on hiring out to customers) G. Dr. Container suspense a/c (with the containers returned at credit back price)
Dr. Cash/ bank (with net proceeds on containers returned i.e. COP-CBP) Cr. Containers sent to customers a/c (with the containers returned at charged out price) H. Dr. Container suspense a/c (with the number of containers retained at the credit back price) Cr. Container stock a/c (with the number of containers retained at the valuation price) Cr. P&L a/c on containers (with profit on containers retained i.e. the difference between credit back price and valuation price MULTIPLIED by the number of containers retained)

2.0.7. ACCOUNTS REQUIRED * Container Stock A/c * Container Suspense A/c * Containers sent to customers A/c

CRATES STOCK ACCOUNT | Qty. | Rate | Amount | | Qty. | Rate | Amount | Year Bal. b/d : on premises : with customers Purchases | No XX XX XX | N VP VP PP | N XX XX XX | Year Crates Suspense : scrapped : retained : depreciation [P unit x (PP-VP)] Bal. c/d : on premises : with customers | No XX XX - XX XX | N VP VP - VP VP | N XX XX XX XX XX | | XXX | | XXX | | XXX | | XXX |

CRATES SUSPENSE ACCOUNT | Qty. | Rate | Amount | | Qty. | Rate | Amount | Year Debtors (returned) Crates Stock a/c : scrapped : retained : depreciation Repairs Bal. c/d Profit and Loss | No XX * XX * * XX | N CBP * VP * * CBP | N XX XX XX XX XX XX XX | Year Bal. b/d : with customers Debtors (invoice or charges) | No XX XX | N CBP COP | N XX XX | | XXX | | XXX | | XXX | | XXX |

CRATES SENT TO CUSTOMERS A/C | Qty. | Rate | Amount | | Qty. | Rate | Amount | Year Bal. b/d : with customers Debtor (Invoice or charges) | No. XX XX | N COP COP | N XX XX | Year Debtor (returned) Crates Retained Bal. c/d : with customers | No XX XX XX | N COP COP COP | N XX XX XX | | XXX | | XXX | | XXX | | XXX |

The profit can be reconciled as follows: N Profit on hire [Invoice qty. x (COP - CBP)] XX Profit on retained crates [Retained crates qty. x (CBP - VP)] XX Expense [Repairs + Depreciation + Scrap total] (XX)

Profit as above XXX

3.0. ILLUSTRATION I
BINGETBIYTC Enterprise dispatched its products to customers in bulk in wooden crates. The crates are bought from the manufacturer at N15 each but are valued for stock purpose at N10. Customers are charged a deposit of N25 per crate, N20 of which is refunded when the crate is returned.
At the beginning 2013, BINGETBIYTC Enterprise was holding 1,750 crates on its premises, whilst 1,460 were held by the customer. The corresponding figures at the end of the year were 3,021 and 1,983 crates respectively.
During the year 2013, the company bought 200 crates charged out 5,663 crates to customers and made refund on 5,104. Of the remainder 170 were scrapped and 36 were retained by customers.
The company incurred N257 in making damaged crates re-useable
Required: Prepare the crates stock and crates suspense account for the year 2013. 3.0.1. SOLUTION
Analysis Rates:
Purchase price (PP) = N15
Valuation price (VP) = N10
Charge-back-price (CBP) = N20
Charge-out-price (COP) = N25 Quantities:
Opening bal.
: on premises 1,750
: with customers 1,460 Closing bal.
: on premises 3,021
: with customers 1,983

BINGETBIYTC Enterprise CRATES STOCK ACCOUNT | Qty. | Rate | Amount | | Qty. | Rate | Amount | 2013 Bal. b/d : on premises : with customers Purchases | No 1,750 1,460 2,000 | N 10 10 15 | N 17,500 14,600 30,000 | 2013 Crates Suspense : scrapped : retained : depreciation [2,000 x (15-10)] Bal. c/d : on premises : with customers | No 170 36 - 3,021 1.983 | N 10 10 - 10 10 | N 1,700 360 10,000 30,210 19,830 | | 5,210 | | 62,100 | | 5,210 | | 62,100 | 2014 Bal. b/d : on premises : with customers | No 3,021 1,983 | N 10 10 | N 30,210 19,830 | 2014 | No | N | N |

CRATES SUSPENSE ACCOUNT | Qty. | Rate | Amount | | Qty. | Rate | Amount | 2013 Debtors (returned) Crates Stock a/c : scrapped : retained : depreciation Repairs Bal. c/d : with customers Profit and Loss | No 5,104 * 36 * * 1,983 | N 20 * 10 * * 20 | N 102,080 1,700 360 10,000 257 39,660 16,718 | 2013 Bal. b/d : with customers Debtors (invoiced or charges) : | No 1,460 5,663 | N 20 25 | N 29,200 141,575 | | 7,123 | | 170,775 | | 7,123 | | 170,775 | 2014 | No | N | N | 2014 Bal. b/d : with customers | No 1,983 | N 20 | N 39,660 |

CRATES SENT TO CUSTOMERS A/C | Qty. | Rate | Amount | | Qty. | Rate | Amount | 2013 Bal. b/d : with customers Debtor (Invoice or charges) | No. 1,460 5,663 | N 25 25 | N 36,500 141,575 | 2013 Debtor (returned) Crates Retained Bal. c/d : with customers | No 5,104 36 1,983 | N 25 25 25 | N 127,600 900 49,575 | | 7,123 | | 178,075 | | 7,123 | | 178,075 | 2014 Bal. b/d : with customers | No 1,983 | N 25 | N 49,575 | 2014 | No | N | N |

The profit can be reconciled as follows: N Profit on hire [5,663 x (25 - 20)] 28,315 Profit on retained crates [36 x (20 - 10)] 360 Expense [1,700 + 257 + 10,000] (11,957)

Profit as above 16,718

3.1. ILLUSTRATION II [Without Retained crates and closing balance on premises] H.O.A a component manufacturer dispatches his items to wholesalers in reinforced cartons which are returnable.
At the beginning of 2012 he held 912 cartons at his factory whilst a further 871 were with his customers.
During 2012 he bought a further 1,000 cartons and scrapped 39 which were irreparable. Customers were charged for 3,064 cartons, and were refunded for 2,855. An amount of N142 was spent on repairs to damaged cartons.
At the end of 2012, 1,027 crates were with his customers.
Cartons were bought in at N10 each but valued for stock at N6. The charge to customers was N15 per carton, N13 of which was refunded on their return. Required:
Prepare the cartons Stock and Cartons Suspense accounts for the year 2012

3.1.1. SOLUTION
Analysis Rates:
Purchase price (PP) = N10
Valuation price (VP) = N6
Charge-back-price (CBP) = N13
Charge-out-price (COP) = N15 Quantities:
Opening bal.
: on premises 912
: with customers 871 Closing bal.
: on premises 1,664
: with customers 1,027

H.O.A CRATES STOCK ACCOUNT | Qty. | Rate | Amount | | Qty. | Rate | Amount | 2012 Bal. b/d : on premises : with customers Purchases | No 912 871 1,000 | N 6 6 10 | N 5,472 3,226 10,000 | 2012 Crates Suspense : scrapped : retained : depreciation [1,000 x (10 - 6)] Bal. c/d : on premises : with customers | No 39 53 - 1,664 1,027 | N 6 6 - 6 6 | N 1,700 360 4,000 9.984 6,162 | | 2,783 | | 20,698 | | 2,783 | | 20,698 | 2013 Bal. b/d : on premises : with customers | No 1,664 1,027 | N 6 6 | N 9,984 6,162 | 2013 | No | N | N |

CRATES SUSPENSE ACCOUNT | Qty. | Rate | Amount | | Qty. | Rate | Amount | 2012 Debtors (returned) Crates Stock a/c : scrapped : retained : depreciation Repairs Bal. c/d : with customers Profit and Loss | No 2,855 * 53 * * 1,027 | N 13 * 6 * * 13 | N 37,115 234 318 4,000 142 13,351 2,123 | 2012 Bal. b/d : with customers Debtors (invoiced or charges) : | No 871 3,064 | N 13 15 | N 11,323 45,960 | | 3,935 | | 57,283 | | 3,935 | | 57,283 | 2013 | No | N | N | 2013 Bal. b/d : with customers | No 1,027 | N 13 | N 13,351 |

CRATES SENT TO CUSTOMERS A/C | Qty. | Rate | Amount | | Qty. | Rate | Amount | 2012 Bal. b/d : with customers Debtor (Invoice or charges) | No. 871 3,064 | N 15 15 | N 13,065 45,960 | 2012 Debtor (returned) Crates Retained Bal. c/d : with customers | 2,855 53 1,027 | N 15 15 15 | N 42,825 795 15,405 | | 3,935 | | 59,025 | | 3,935 | | 59,025 | 2013 Bal. b/d : with customers | No 1,027 | N 15 | N 15,405 | 2013 | No | N | N |

The profit can be reconciled as follows: N Profit on hire [3,064 x (15 - 13)] 6,128 Profit on retained crates [53 x (13 - 6)] 371 Expense [4,000 + 142 + 234] (4,376)

Profit as above 2,123
SHORT WORKINGS
CALCULATION OF CRATES RETAINED Units (No) Units (No)
Bal. b/d
: with customers 871
Debtors (invoice or charges) 3,064 3935
Debtors (returned) 2,855
Bal. c/d
: with customers 1,027 (3882)
Container Retained 53

CALCULATION OF CLOSING BALANCE OF CRATES ON PREMISES
N N
Bal. b/d
: on premises 912
: with customers 871
Purchases during the period 1,000 2,783
Crates Scrapped 39
Crates Retained 53
Bal. c/d
: with customers 1,027 (1,119) Bal. c/d: on premises 1,664

3.2. PURPOSE OF KEEPING SEPARATE ACCOUNTS FOR CONTAINERS
Containers require investment. Hence, a separate account should be maintained for containers. The separate account is not necessary for non-returnable containers. But for returnable containers the separate account is necessary for the following reasons. 1. The separate account is necessary for controlling over the movement of containers. Time to time it needs reconciliation and the regular incoming and outgoing of containers must be recorded. 2. For an ascertainment of profit or loss arising out of containers also, the separate accounting is necessary.

3.3. USES OF CONTAINER ACCOUNTS
The following organizations make use of container account: 1. Bottling companies 2. Egg producing companies 3. Gas refilling companies 4. Paint manufacturing companies, etc.
These companies make use of both Container stock account and the container suspense account.

3.4. RECOMMENDATIONS 1. Container account is a very technical and delicate account, therefore, so much care should be taken when posting to the various accounts and at the appropriate rates should be used too. 2. Container account should be thought with experience in organizations which make use of it. 3. Container account should also be thought in tertiary institutions with practical and field work experience. 4. That organizations, through international co-operation as appropriate, where practicable define and implement policies designed to ensure that the costs of the adverse environmental impacts of the manufacture and use of containers are effectively and equitably borne by the producers and users of such containers. 5. Standardization is likely to increase the efficiency and feasibility of refillable container systems, since it would act favourably on the willingness of retailers to supply refillable containers and would de-crease the inconveniences suffered by consumers when returning containers. This measure would also ease the purchase of empty containers at their resource value, without using a deposit system. Standardization would, however, limit the introduction of new container types.

REFERENCES
Aborode, R. (2012). A practical approach to Advanced Financial Accounting. Lagos: EL-TODA Ventures Limited.
Anao, A.R. (1989). An Introduction to Financial Accounting. Ibadan: Longman Nigeria Limited.
Institute of Chartered Accountants of Nigeria, Financial Accounting, Study Pack, Lagos. Jennings, A.R (1993). Financial Accounting. Nottingham: Learning Solutions Speciality Publications Ltd. Jennings, A.R (1993). Financial Accounting Solution Nanual . Nottingham: Learning Solutions Speciality Publications Ltd.