VOYAGE ACCOUNTING

By, RashyNaaz

Voyage Accounting?
Voyage accounting is used to find financial results from the business of marine ship. Owner of marine ship uses it for transporting the goods and passengers. For completing the voyage accounting, accountant has to open voyage account for each travel. All the expenses of voyage will be included in the debit side of voyage account and all the incomes of voyage will be included in the credit side of voyage account. It is similar an ordinary Profit and Loss Account. Covers both outward and return journey of the vessel.

Special Attention
Expenses Address commission Insurance Stores Depreciation Bunker cost Port charge Incomes Passage Money Primage Freight

Voyage In Progress
If one voyage has to complete by going to London from Mumbai and then return from London to Mumbai. At the end of year, if traveling from London to Mumbai is continuing, at that time, we have to calculate expenses and incomes on incomplete voyage and treat according to accounting rule. (A) Receiving of Advance Income :

income or

i)Deduct advance income of incomplete voyage from total voyage ii) show in the debit side of voyage account

( B) Paying of Advance Expenses : i ) deduct advance expenses of incomplete voyage from total voyage expenses or ii) show in credit side of voyage account

Exercise 1
Example: A ship commenced its journey from Mumbai to Kolkata on 31st march on which date the accounts are closed. Ship was on her half way back to Mumbai from Kolkata. The details for the entire voyage to Kolkata and back were : Freight Rs. 80000 Coal consumed Rs. 14000 Salaries Consumed Rs. 6000 Port charges Rs.3000 Salaries of crew Rs. 8000 Depreciation Rs.8000 Insurance of ship Rs. 10000 Insurance of freight Rs. 4000 Address commission 5% We could get only 30000 rupees freight on return. Primage 10%.

Dr. Coal Consumed Stores Consumed Port Charges Salaries of Crew Depreciation Insurance of Ship Insurance of Freight Address Commission 14000 6000 3000 8000 8000 10000 4000 4400

Cr. Freight Primage Advance Expense on Incomplete Voyage 80000 8000 27650

Advance income from freight 33000 30000 + 30000 X 10%=

Net Profit ( Balancing figure)

25250
115650 115650

Working Note
1) 2) 3) Primage = 80000 + 10% = 8000 Address Commission = 5% on freight + Primage = 5% on 88000 = 4400 Advance freight on incomplete voyage = Freight: 30000 Primage: 10% on 30000 = 33000 Advance Expenses on Incomplete Voyage = Address commission = 5% on 33000 = 1650 Insurance Advance premium of freight= 4000 X advance only freight / total freight = 4000 X 30000/80000 = 1500 because half travelling is completed and half is incomplete. So, it means 1/2 of all other expenses are advance

4)

 on Other Expenses: coal consumed + store consumed + port charges+ salaries + depreciation + insurance of ship 1/2 X (14000 + 6000+3000+8000+8000+10000) = 24500 ----------------------------------------------------------------Total Advance Expenses = RS. 27650 ===========================================

2.
SS Himalaya set out on a voyage from Calcutta to Bombay, On December 31 the accounts are to be closed, the return voyage had not been completed. The details for the entire Voyage to Bombay and back to Calcutta completed after December 31 were: Freight Rs. 400000 Coal consumed Rs. 70000 Salaries Consumed Rs. 30000 Port charges Rs.15000 Salaries of crew Rs. 40000 Depreciation Rs.40000 Insurance of ship Rs. 20000 Insurance of freight Rs. 8000 Address commission 5% Only Rs.150000 freight was available on the return journey. Prepare Voyage Accounts.

Dr.

Cr.

Coal Consumed
Stores Consumed Port Charges Salaries of Crew Depreciation Insurance of Ship Insurance of Freight Address Commission Advance income from Frieght:150000 Primage:15000 X 10%=15000 Net Profit ( Balancing figure)

70000
30000 15000 40000 40000 20000 8000 22000

Freight Primage Advance Expense: (107500+11250)

400000
40000 1,18,750

165000

1,48,750 558750 558750

Thank you