FORMATIVE ASSESSMENT

1. The CC Manufacturing Co. delivered 10 DVD players to DD Co. on consignment. Each DVD player
costs P3,000 each and is to be sold at P5,000 each. The CC Manufacturing Co. paid shipment costs of
P2,500. DD Co. submitted an account sales stating that it had returned one unit and was remitting
P21,900. This amount represents the total amount due to CC Manufacturing Co. after deducting the
following from the selling price of the DVD player sold:

Commission 20% of selling price

Advertising 1,000

Delivery and Installation 600

Cartage on consigned goods 500

● The profit or loss on consignment realized by CC Manufacturing Co. is 2300

● The number of units sold by DD Co. is 6
● The cost of inventory in the hands of DD Co. is 9900

2. On June 1, DD Co. shipped 25 DVD to BB View Store on consignment. The DVD is to be sold at an
advertised price of P200 per item. The cost of each DVD to the consignor is P100. The consignor paid
P75 to ship the merchandise. Commission is to be 25% of sales price. During the month, 2 DVD were
returned. On June 30, BB View Store remitted the amount due to consignor after deducting commission
of P400.

● The cost of inventory on consignment amounted to is 1545

● The amount remitted by BB View Store is 1200
● The consignment profit is 370

3. On May 15, 2020, AA Co. received a shipment of merchandise with a selling price of P15,000 from PC
Co. The consigned goods cost PC Co. P10,000 and freight charges of P120 had been paid to ship the
goods to AA Co.

The consignment arrangement provided for a sale of merchandise on credit with terms of 2/10, n/30.
The 15% commission is to be based on accounts receivable collected by the consignee. Cash
discounts taken by the customers, expenses applicable to goods on consignment and any cash
advanced to the company are deductible from the remittance by the consignee.

AA Co. advanced P6,000 to PC Company upon receipt of the shipment. An expense of P800 was paid
by AA. By June 20x4, 70% of the shipment had been sold, and 80% of the resulting accounts
receivable had been collected, all within the discount period. Remittance of the amount due was made
on June 30, 2020.

● The cost of unsold goods in the hands of AA is 3036

● The profit on consignment is 873
● The cash remitted by AA Co. is 172