Financial accounting 1 – UNIT II - Consignment Account

Problem on calculation of commission

1. Mr. Ajith send 2500 units costing Rs.1000 each to Mr.Kumar.
M r. Kumar sold 1500 units at Rs.1420 per unit on credit and 750 units at Rs.1400 each for
cash.
Calculate commission payable to consignee
a) at 5% and del-credre commission at 2% on sales.

2. Problem on calculation of abnormal loss in transit

Number of units consigned-100 units in the following cases:
b) If Mr. Kumar was entitled to a commission of Rs.50 per unit sold
 If Mr. Kumar was entitled to an ordinary commission
 Cost per unit Rs.75
 Non recurring expenses upto the loss – Rs.700
 Number of abnormal loss in transit – 5 units
 Calculate the value of abnormal loss

3. Chandan & company of Calcutta consigned goods costing Rs.25000 to their agent Ramlal, on
which they pay freight, insurance and other charges of Rs1500, drawing on him at 90 days
bill for Rs.20000. They discount the bill with a bank at a discount Rs.150. after 3 months
they received from their agent an account sales informing that the entire consignment had
been sold for Rs.35000, that expenses amounting Rs.700 have been incurred and showing as
a deduction they agreed commission of 2% on the amount realized. A draft on the bank was
enclosed for the balance due.
Show the journal entries and important ledger accounts in the books of both the parties.

4. S ltd forwarded on 1st January 2015, 100 bicycles to N& Co of Delhi to be sold on behalf of S
ltd. The cost of one bicycle was Rs.250, but the invoice price was Rs.300. S ltd incurred
Rs.1000 on freight and insurance and received Rs.10000 as advance from N& Co paid Rs.500
as octroy and carriage, Rs.400 as rent and Rs.300 as insurance and by 30th June, 2015 had
disposed of 80 bicyles for Rs.25000. N& Co is entitled to commission on sale at 5% on
proforma invoice price and 25% of any surplus price realised. N& Co remitted the amount
due from them by a bank draft.

You are required to give journal entries to record the above transaction in the books of
consignor and Prepare consignment account only.

5. Arun consigned 100 mini toy cars to sujoy to be sold at his risk. Cost of 1 mini toy car is 150.
But invoice price was Rs.200. Arun paid freight Rs.600 and insurance in transit Rs.200.

Sanjoy sent a bank draft to arun for Rs.10000 as advance payment and later send an account
sales showing that 80 toy were sold at Rs.220 each. Expenses incurred by sanjoy were:
carriage inward Rs.25, octroy Rs.75, godown rent Rs.500 and advertisement Rs.300. sanjoy is
entitled to a commission of 5% on sales.Journalise the above transactions in the books of
Arun and Sanjoy and prepare ledger account

BC 1118 Financial Accounting 1 1

 6. Railway Freight, etc. Rs 1,000
Godown Rent and Insurance Rs 1,500
Raja Mills Ltd., draw on the consignees a draft for Rs 30,000 which is duly accepted.
It is discounted for Rs 28,650. Later Fancy Stores, Delhi, report that the entire
consignment has been sold for Rs 78,000. Show journal entries and the important
ledger accounts in the books of the consignor.

7. Vimal Mills Ltd. sent 100 pieces of suiting to Lal Garments House of Delhi on consignment
basis. The consignees are entitled to receive 5 per cent commission plus expenses. The cost
of Vimal Mills Ltd. is Rs. 200 per suiting. Lal Garments House pays following expenses :
Railway Freight Rs. 500
Godown Rent & Insurance Rs. 1,000
Vimal Mills Ltd. draws on the consignees a bill for Rs. 10,000 which is duly accepted.
Subsequently it is discounted for Rs. 9,500. The consignees informed the consignor of the
sale of the entire consignment for Rs. 28,500. Show journal entries and ledger accounts in
the book of the consignor.

BC 1118 Financial Accounting 1 2