Professional Documents
Culture Documents
A consignment business depends on the dealers or agents for selling goods across the countries
or globe. In a consignment business, the owner (consignor) sends the goods to the
agent/dealer/consignee, and the consignee sells the goods in exchange for commission. The
entire profit or loss is enjoyed/ suffered by the owner, and also all risks remain with the owner.
Del credere commission: paid for taking the risk of collecting dues from customers.
Special commission: paid on excess of normal selling price, and usually to test the extent of
market price that the customers are willing to pay in a new market.
Sales account is a ledger account where all types of sales transactions are posted at the end of a
month or on a real-time basis. Accounts sales, on the other hand, is a statement prepared by the
agent/dealer/ consignee describing the quantity and amount of sales, expenses charged, unsold
stock on hand and balance due to the company.
Recurring expenses are incurred repeatedly or regularly such as salaries, wages, advertising,
selling expense, godown/storeroom/warehouse rent, insurance expense incurred by
agent/consignee.
Stock of yarn with agents at the beginning 30,000 kg costing Tk 600,000; total quantity of yarn
consigned 140,000 kg at Tk 30 per kg; total quantity of yarn sold 160,000 kg at Tk 60 per kg;
total remittances by the agents Tk 3,000,000; railway freight and insurance paid by the
consignor Tk 400,000 and Tk 200,000 respectively. Of the sales made, Eastern Traders could not
collect Tk 70,000 due to the insolvency of a customer. Eastern traders paid unloading expenses
Tk 60,000; advertising expense Tk 80,000; and storeroom rent Tk 84,000. 2,000 kg of yarn were
damaged in transit by railway for which the agents recovered Tk 30,000. Of the damaged yarn,
2,000 kg were sold in the second hand market @ Tk. 10 per kg.
Requirements:
Prepare the following ledger accounts in the books of Anlima Mills Ltd:
i) Consignment account
ii) Abnormal loss account
iii) Eastern Traders account
Solution:
= [{(4,200,000+600,000)/140,000} ×2,000]
=68,571
Working Note-2:
Calculation of unsold/ending stock = [{(Cost of goods sent + All non-recurring expense incurred
by both consignor and consignee-Cost of abnormal loss)/ (Unit sent-normal loss unit-abnormal
loss unit)} × Unsold unit]
=(4791429/138,000) × 8,000
= Tk 277,764
Particulars Tk Particulars Tk
To, Consignment A/C 68,571 By, Eastern Traders (Or Bank 30,000
A/C if the compensation received
by consignor)
To, Eastern Traders (Commission 4,000 By, Eastern Traders (Sales 2,000 20,000
2,000 kg @ Tk 2 per kg) kg @ Tk 10 per kg)
By, Loss transferred to profit & 22,571
loss A/C
72,571 72,571
Requirement iii) Eastern Traders Account
Particulars Tk Particulars Tk
To, Consignment A/C (Sales) 9,600,000 By, Consignment A/C:
Unloading expense 60,000
Advertising expense 80,000
Storeroom rent 84,000
Commission:
(160,000 @ Tk 2)= 320,000
544,000
To, Abnormal loss A/C 50,000 By, Abnormal loss A/C 4,000
Q7. ABC Ltd of Dhaka consigned 90 pieces of refrigerator costing Tk 20,000 each to Mr. Y of
Khulna on 01.06.2019. The goods were to be sold at 30% above cost. Any deficiency in selling
price was to be borne by Mr. Y. Mr. Y was, however, entitled to a special commission @ 25% of
any surplus price realized. Mr. Y was further entitled to an ordinary commission of 5% and del
credere commission of 1% on all sales. ABC incurred the following expenses: loading charges
Tk 12,000, insurance premium Tk 10,000, and railway freight Tk 6,000. The cases were received
by Mr. Y on 15.06.2019. The account sales received from Mr. Y on 30.06.2019 revealed the
following:
30 refrigerators sold @ Tk 28,000, 10 refrigerators sold @Tk 25,000, and 20 refrigerators @Tk
29,000. 3 refrigerators were damaged during transit. The insurance company paid Tk 40,000 to
ABC as compensation. Mr. Y incurred unloading charges Tk 30,000; salesman salary Tk 9,000
and warehouse rent Tk 32,000. Mr. Y enclosed a bank draft for the balance due.
= [{(1,800,000+28,000)/90} ×3]
=60,933
Working Note-2:
Calculation of unsold/ending stock = [{(Cost of goods sent + All non-recurring expense incurred
by both consignor and consignee-Cost of abnormal loss)/ (Unit sent-normal loss unit-abnormal
loss unit)} × Unsold unit]
=1797067/87*27
= Tk 557,710
Working Note-3:
Particulars Tk Particulars Tk
To, Consignment A/C 60,933 By, Bank A/C 40,000
By, Loss transferred to profit & 20,933
loss A/C
60,933 60,933
Particulars Tk Particulars Tk
To, Consignment A/C (Sales) 1,670,000 By, Consignment A/C:
Unloading expense 30,000
Salesman salary 9,000
Warehouse rent 32,000
Commission (WN-3) 120,200
191,200
By, Bank A/C 1,478,800
1,670,000 1,670,000
Home Work
Q8. WALTON Ltd of Dhaka consigned 80 pieces of refrigerator costing Tk 20,000 each to Mr. Y of
Khulna on 01.06.2017. The goods were to be sold at 20% above cost. Any deficiency in selling price
was to be borne by Mr. Y. Mr. Y was, however, entitled to a special commission @ 25% of any
surplus price realized. Mr. Y was further entitled to an ordinary commission of 5% and del credere
commission of 2% on all sales. WALTON incurred the following expenses: loading charges Tk
12,000, insurance premium Tk 10,000, and railway freight Tk 6,000. The cases were received by Mr.
Y on 15.06.2017. The account sales received from Mr. Y on 30.06.2016 revealed the following:
30 refrigerators sold @ Tk 27,000, 10 refrigerators sold @Tk 23,500, and 20 refrigerators @Tk
29,000. 2 refrigerators were damaged during transit. The insurance company paid Tk 30,000 to
WALTON as compensation. Mr. Y incurred unloading charges Tk 3,000; salesman salary Tk 8,000
and warehouse rent Tk 3,000. Mr. Y enclosed a bank draft for the balance due.