Accounting for Containers

Accounting for containers is very important if you pack your product in containers before selling to your consumers. Containers may be box, drum, cylinder, bag or bottle. To calculate the cost of packaging and to record is very necessary. We can divide accounting for containers into two parts.

(A) When Containers are Non- returnable

When we sell the goods in containers, our customers do not return our containers. At that time, we use following accounting system :

(I) When no separate charge is made : 

In that situation, we add the price of packages in the sale price of products. We open a separate account "Package Stock Account"  in our books. We can calculate cost of consumption of containers.

= Opening stock of containers + purchase of containers - Closing stock of containers. 

If it is the part of cost of product, we transfer it to production account, if it is the part of cost of sale, we transfer it to profit and loss account.

(II) When a separate charge is made :

When we make a separate charge for non returnable containers, we will get profit from containers and it will be transfer to profit and loss account, we can calculate it with following way by opening package account.


Debit of package account = opening stock of containers + purchase of containers 


Credit of package account = amount of containers received from customers + closing stock of containers


Profit from containers = Excess of credit side over debit side of container account 

(B) When containers are returnable

( I ) When no separate charge is made

It means we sell our products in containers. Our customers get our products and return our container back to us. We should take tension of the containers which are in the hand of customers because we are not taking any charges. At that time, we divide total stock of containers into two parts, one is container stock in our store and other is container stock with customers. We pass following journal entries in our books :

a) For purchasing container stock

Container stock account Dr.

Cash/ bank/ creditor account Cr.

b) For goods sold in containers 

Customer account Dr.

Sale Account Cr.

c) When containers are returned by customers

Sale Return account Dr.

Customer account Cr.

d) When containers are repaired 

Container Stock account Dr.

Bank/ Cash account Cr.

e) When containers are destroyed or lost

Profit and loss account Dr.

Container stock account Cr.

e) Depreciation on container asset

Profit and loss account Dr. ( Depreciation)

Container stock account Cr.

( II ) When separate charge is made 

In this method, we will take some advance price and when our customer will return our container, we will return his deposit amount which will be less than advance price and difference will be our rent. If customer will not return our container, we did not repay his advance amount. If separate charge is made for returnable container stock from customer, we have to calculate following things

At this time we use one of following method

1. Stock and Trading Method

In this method we make four accounts for doing accounting treatment of containers.

i ) Container Stock account

This is real account and this account is opened for effective control over containers. Its proforma has been given below.

ii) Container Trade Account

This is account is made for knowing the profit or loss on containers.

Debit side of container trade account

a) Container Stock Account ( We add container retained, containers scrapped and depreciation)

b) Bank Account ( For repair)

c) Profit and loss account ( for profit )

Credit side of container trade account 

a) Hire charges account

b) Container deposit account

c) bank account ( Sale of scrap)

d) Profit and loss account ( Loss)

iii) Container Deposit Account

This account is also called container suspense or container provision account which is made in every method of accounting of container. This account is created on returnable price. Returnable price is just like a security which is collected from each customer. When customer will return our container, we will return his given security amount. We show security amount in our liabilities or we can deduct it from our debtors.

iv) Container Debtor or Customer  Account

Debit side of this account shows

i) Balance b/d ( Container stock with customers)

ii) Container deposit Account

iii) Hire Charges Account ( Rent received on returned containers)

Credit Side Shows

i) container deposit account ( Refund)
ii) Bank account ( Bal. figure)
iii) Balance C/d

2. Stock and Suspense Method

In this method, we do not open container trade account, we add container trade account in container stock account. Other container deposit account and container debtor account will open just like container stock method .

3. Trading and Suspense Method

In this method, we do not open container stock account. We add container stock account in container trade account. Other two accounts will open just like above two methods.