ENABLING ASSESSMENT

1. CCB Industries sells merchandise on a consignment basis to dealers. Shipping costs are chargeable to
CCB, although in some cases the dealer pays them. The selling price of the merchandise averages
25% above cost of the merchandise exclusive of freight. The dealer is paid a 10% commission on the
sales price for all sales made. All dealer sales are made on a cash basis. The following consignment
sales activities occurred during 2020:

Manufacturing cost of goods shipped on consignment 500,000

Freight cost incurred:
Paid by CCB 30,000
Paid by dealer 10,000
Set price of merchandise sold by dealer 420,000
Payment made by dealers after deducting commission
And freight costs 278,000

● The consignment profit is

15120

● The amount of cost of goods sold is

362880

● The cost of inventory on consignment that should appear in the statement of financial position of
CCB at the end of accounting period is
177120

● The amount of consignee receivable at the end of the year is

90000

2. Grid Works Co. consigned 5 dozens of stainless chairs to Contemporary Furniture CO. on April 1 of the
current year. Each chair costs 120 and the consignor paid 600 for the shipment to the consignee. On
August 15, 36 chairs were already sold and Contemporary rendered an account sales and remitted the
balance due to the consignor in the amount of 5,580 after deducting the following expenses:

Commission (15% on sales)

Selling expenses 360
Delivery expenses 180
Freight of 12 defective chairs returned 255

● The total sales price is (NOTE: TWO CASES)

7500

● The cost of inventory on consignment is (NOTE: TWO CASES)

1560

● The profit on consignment is (NOTE: TWO CASES)

780