VOYAGE ACCOUNTING
Definition
A voyage account has to be opened for each traveling. All expenses incurred on voyage will but recorded in the debit side of voyage account while all incomes will be recorded in the credit side of the voyage account. Usually, total number of items in expenses is more than number of items in incomes.
Read Also: Correction Of Errors In Accounting
Expenses include/Items Included In Voyage;
1. Address commission2. Brokerage
3. Remuneration
4. Insurance
5. Wages
6. Stores
7. Depreciation
8. Bunker cost
9. Port Charges
Incomes include;
1.Passage Money2. Freight
3. Primage
Read Also: How To Prepare Joint Venture Account
Terminologies/Items Included:
1. Stevedores: These are employees hired for loading and unloading cargo.2. Wharfage: This is the amount paid to Port authority for using a wharf.
3. Voyage: Transportation of goods and passengers via sea route by ship.
4. Stores: Expenses of using stores.
5. Brokerage and Address Commission: They are the payments made by the owner of the ship to an agent. It is a percentage of income of a particular journey.
6. Freight: Amount received for transporting the goods.
7. Depreciation: The ship is a fixed asset subjected to depreciation. It is calculated by using the formula:
Total depreciation x Period of usage
12 months or 365 days
Accounting Entries- Debit and Credit:
Voyage Account is debited usually with the following items:1. Bunker Cost:
Bunker cost is the expenditure incurred on fuel, oil, coal, diesel and fresh water used during the voyage. These days, oil and diesel are used in place of coal. A place for storing coal is referred to as bunker. Hence the name bunker costs emerged.2. Port Charges:
The shipping companies use Port for the loading and unloading of goods as well as parking of ships, Thus, the charges paid for these purposes are called port charges. These are the charges paid to port authorities for allowing the ship to use the port either for loading or unloading the cargo.3. Depreciation:
Depreciation of the ship for the period of voyage is calculated and charged to the Voyage Account.4. Insurance:
Insurance premium of cargo must be entirely debited to the concerned Voyage Account while the insurance charges of the ship are charged proportionately to each voyage on the basis of time of voyage.5. Address Commission and Brokerage:
This is payable to the agents and brokers who help the shipping company in procurement of cargo, i.e., freight or business. This is calculated at a certain percentage of the freight earned including the primage or surcharge and debited to the Voyage Account. While, address commission is payable to the Charterer, brokerage is payable to the agent of the charterer.6. Stevedoring Charges:
They are the expenses incurred in loading of goods on the ships and unloading of goods from the ships. They are referred to as stevedoring charges.7. Salaries and wages of the crew, captain and other staff.
8. Harbour charges
9. Manager’s commission, if any.
Voyage Account is credited usually with the following items:
1. Freight:
This is the amount charged by the shipping companies for transporting the goods from one place to another. This amount charged by the shipping companies is called freight. It is an income.2. Primage:
It is additional freight just like surcharge on freight originally collected for the captain of the ship, now-a-days it is treated as income of the shipping company.3. Passage Money:
Fare collected from the passengers travelled in addition to the fare collected for merchandise.4. Closing Stocks of Stores, Provisions, Coal, Fuel etc.
Generally, voyage profit represents the excess of voyage incomes earned over the expenses incurred for this purpose. But if, however, the voyage is in progress, the incomes and expenses relating to the unfinished voyage are carried forward to the next year.Excess of credit side of Voyage Account over its debit side is profit on the voyage and vice versa. This profit or loss is transferred to General Profit and Loss Account of the shipping company.
Preparation of Voyage Account
The voyage account is prepared on the lines of income statement. All expenses are debited while all incomes are credited with their respective items and the balance will show the profit or loss regarding the voyage.Read Also: Preparation of Job and Batch costing: All You Need To Know
Example: A ship was chattered from Lagos to Accra on 31st December. The accounts were closed after the arrival of the ship. The details for the voyage to Accra and back were:
$
|
$
| ||
Store consumed
Coal consumed
Depreciation
Port charges
Salaries of crew
Insurance of ship
Insurance of freight
Address commission
Fuel
|
7000
15000
6000
3000
8000
10000
5000
5%
1050
|
Freight
|
90000
|
Voyage Account
Dr. Voyage Account Cr.
$
|
$
| ||
Store consumed
Coal consumed
Depreciation
Port charge
Salaries of crew
Insurance of ship
Insurance of freight
Address commission
Fuel
NET PROFIT(bal. figure)
|
7000
15000
6000
3000
8000
10000
5000
4950
1050
39000
|
Freight
Primage
|
90000
9000
|
99000
|
99000
|
2. Address Commission = 5% of (freight + primage)
I need questions and answers on voyage account
ReplyDeleteHow do we calculate d salary given in a voyage account
ReplyDelete