Accounts

Consignment

Points:

Ordinary commission = suppose Rs. 2 for 5 bottles

Special com = If you sale my bottle I’ll give 5% on sales

Del credere com = I’ll give you 6% on the units, if bad debts happen it is on retailer

Consignment ac is a debit balance and nominal ac coz it denotes as a expense

Goods sent on consignment is also a nominal balance

Q1. On 1st September, 2017, C of Kolkata sent 500 cases @ Rs. 120 each to Sri B of Mumbai to be
sold on his account and at his risk for 5% commission and 2% del-credere commission, and incurred
Rs. 5,000 expenses. Rs. 20,000 Advance has been received on 15 th September,2017. Mr. b sent an
account sale disclosing that 300 cases have been sold at Rs. 200 each and another 100 cases @ Rs.
190 each. He has incurred unloading expenses etc. Rs. 500 and selling expenses of Rs. 800. He sends
a Bank Draft for the net amount due.

Show journal entries and ledger accounts in the books of C.

Ans: Journal Entry

 Consignment a/c Dr. to goods sent on consignment a/c 60k 60k (500 x 120) (being goods
sent on consignment)
 Consignment a/c Dr. to Cash or bank ac 5k 5k (being expenses paid)
 Cash or bank ac Dr. to Consignee Ac 20k 20k (being cash received in advance)
 Consignee a/c Dr. to Consignment a/c 79k 79k [{300 x 200} {100 x 190}] (Being goods sold
by consignee)
 Consignment a/c Dr. to Consignee a/c 1.3k 1.3k [500+800] (being expenses paid by
consignee)
 Consignment a/c Dr. to consignee a/c 5,530 5,530 [79,000 x 7%] (being commission due)
 Cash or bank a/c Dr. to consignee a/c 52,170 52,170 (being final settlement done)
 Goods sent on consignment a/c Dr. to Trading or P/L a/c 60k 60k (being amount
transferred)
 Consignment stock a/c Dr. to consignment a/c 13,100 13,100 (being consignment stock
accounted)
 Consignment a/c Dr. to P/l a/c 20,700 20,700(being profit transferred to P/L a/c)

Consignee Account
 To consignment a/c 79k By Cash/bank a/c 20000
By Consignment a/c 1300
By Consignment a/c 5530
By Cash/bank a/c (bal. fig.) 52170

79k 79k

Goods sent on consignment

To trading / pl a/c (bal. fig.)60k By consignment a/c 60k

60k 60k

Consignment Account

To Goods sent on consignment a/c 60,000 By consignee a/c 79,000

To Cash/bank a/c 5,000 By consignment stock a/c 13,100
To Consignee a/c:
Unloading charges = 500
Selling expenses = 800
1,300
To Consignee a/c 5,530
To P/L a/c (bal. fig) 20,700

92,100 92,100

Working notes:

Valuation of stock

Closing stock = 500 – (300 + 100) = 100

Value of closing stock = CP/IP of CS + Expenses by consigner + Expenses by consignee
= (100 x 120) + [(5,000/500) x 100] + [(500/500) x 100]
=12,000 + 1,000 + 100
=13,100

Q2. Amisha sends 1000 cases of Rs. 150 each. Expenses incurred Rs. 5000 and promise to pay
5% on sales. Priyanka being a consignee received 1000 cases of goods and incurred Rs. 1000
for unloading charges and Rs. 800 as go-down rent. Priyanka sold only 900 cases @ Rs. 100
each. Pass necessary journal entries and open goods sent on consignment account and
consignee account.

Ans: Journal Entry

 In the books of Amisha
 Consignment a/c Dr. to goods sent on consignment a/c 1.5L 1.5L (1,000 x 150) (being
goods sent on consignment)
 Consignment a/c Dr. to Cash/bank a/c 5,000 5,000 (being expenses paid)
 Priyanka a/c Dr. to Consignment a/c 90,000 90,000 (900 x 100) (Being goods sold by
consignee)
 Consignment a/c Dr. to Priyanka a/c 1,800 1,800 (1,000 + 800) (being expenses paid by
Priyanka)
 Consignment a/c Dr. to Priyanka a/c 4,500 4,500 (90,000 x 5%) (being commission due)
 Cash/bank a/c Dr. to Priyanka a/c 83,700 83,700 (being final settlement done)
 Goods sent on consignment a/c Dr. to Trading or P/L a/c 1.5L 1.5L (being amount
transferred)
 Consignment stock a/c Dr. to consignment a/c 15,600 15,600 (being consignment stock
accounted)
 P/l a/c Dr. To Consignment a/c 55,700 55,700 (being loss transferred to P/L a/c)

Priyanka’s Account

To consignment a/c 90,000 By consignment a/c 4,500

By consignment a/c 1,800
By cash/bank a/c (bal. fig.) 83,700

90,000 90,000

Goods sent on Consignment Account

To Trading or P/L (bal. fig.) 1,50,000 By Consignment a/c 1,50,000

1.5L 1.5L

Consignment Account

To Goods sent on consignment a/c 1,50,000 By Priyanka a/c 90,000

To cash/bank a/c 5,000 By Consignment stock a/c 15,600
To Priyanka’s a/c:
Unloading charges = 1,000
Go-down Rent = 800
1,800
To Priyanka’s a/c 4,500 By P/L a/c (bal. fig.) 55,700

1,61,300 1,61,300
Working Notes:
Valuation of stock:

Closing Stock = 1000 – 900 = 100

Value of stock = (100 x 150) + [(5000/1000) x 100] + [(1000/1000) x 100]

= 15,000 + 500 + 100

= 15,600

Q3. Anurag Agarwal consigned 800 packets of lipsticks, each packet containing 200 lipsticks. Cost
price of each packet is 600. Anurag spent 100 per packet as cartage, freight, insurance and
forwarding commission. 2 packets were was lost on the transit and Anurag lodged claim with the
insurance company and could gent only 540 as claim on average basis. Consignee took delivery of
the rest of the rest of the packets and spent 39,900 as other non recurring expenses and 22500 as
recurring expense . he sold 740 packets at the rate of 7 per lip stick. He was entitled to 4%
commission on sales and 2% del credre commission. Prepare the consignment account and
consignee’s personal account.

Consignment Account

To Goods sent on consignment a/c[800x600] By consignee a/c [740 x 200 x 7] 10,36,000

4,80,000
To cash a/c [800 x 100] 80,000 By ab loss 1400
To consignee a/c 62,400 By consignment stock ac 43500
To consignee a/c [10,36,000 x 6%]62,160

To pl ac bal fig

1080900

Abnormal loss

To consignment ac 1036000 By cash ac1080

By pl loss ac 320
 Consignee ac

To consignment ac1036000 By consignment ac 62400

By consignment ac 62160

By cah bank

Working notes:

Valuation of abnormal loss –

 Basic cost [2 x 600] = 1200

 Add, Exp of consigner [2 x 100] = 200
 Less, insurance claim [2 x 540] = (1080)
 Net loss = 320

Valuation of consignment stock:

Accounting of gross loss –

Abnormal loss a/c Dr. to to consignment ac 1400 1400

Insurance claim recovered –

Cash/bank ac dr. to abnormal loss

Accounting for net loss

Pl to ab loss

Q4. Ramesh consigned 2000 kg. of chemicals at cost of rs 800 per kg. to john. Ramesh paid freight
and insurance charges of rs 20000. Of the above 500 kgs of chemicsls were destroyed by fire in
transit. John cleared the balance of 1500 kg of chemicals and sold 1000 kgs at an average price 1000
per kg. John icureed godown rent 5000 insurance 3000 clearing charges 4500. Insurance claim
received 400000 after admitting the salvage value of stock destoyed by fire at 5000. John was
entitled to 10% commission on sales. John sends the balance to Ramesh after adjusting his
commission and expenses out of the sale proceeds. Prepare a consignment account and johns ac in
the books of Ramesh.

Ans –

Consignment ac

To goods sent on consignment 1200000 By Abnormal loss 405000

To cash ac 20000 By john ac sale 100000
To johns ac exp 12500 By consignment stock 406500
To johns ac comm 100000

To pl ac 479000
1811500

John account

To conment 1000000 By conmnt 12500

By conment 10000

By cash 88750

1000000

Abnormal loss

To consignment ac 405000 By insurance claim ac 400000

By cash ac 5000
Working notes:

1. Valuation of abnormal loss

 Basic cost [{(1600000 + 20000) / 2000} x 500] = 405000
 Less, insurance claim = (400000)
 Less, salvage value = (5000)
 Nil
2. Consignment stock

500 x 800 + 20000 / 2000 x 500 + 4500/1500 x 500

= 406500

Q. x of Kolkata

Ans

Consignment ac

To gsc ac 250000 By ys ac sales 318000

To cash ac 7000 By consignment stock 251150
To ys ac 4500
To ys acc 225x500 112500
To ys ac nc 112500
To ys ac sc 51000
To pl ac bal fig 643650
3431150 3431150
Working note :

Special commission = [¼ x (gross sale proceed – total commission)] – (no. of units sold x 12500)

Sc = ¼ [318000 – 112500 - sc] –[ 225 x 12500]

4Sc + sc = 255000

Sc = 51000

Consignment stock = 250 – 225 = 25

= 25 x 10000 + 7000/250 x 25 + 4500/250 x 25

= 251150

To gsc 28400 By cash 10000

To cash ac 1045 By cnsmnt stock 5889
To b ac [1136 + 820] By gsc 7500
To stock reserve 1500 By consignee 26000

To pl ac bal fig 6488

39389 39389

Consignment Account

To Goods sent on consignment [50x200] 10,000 By Krishna a/c [sale] [1,300 x 8] 10,400
 To Cash a/c 200 By Abnormal loss 204
To Krishna[commission] [10,400 x 6%] 624 By Consignment stock 3,366
To P/L a/c [bal. fig.] 3,146

13,970 13,970

Krishna Account

To Consignment a/c 10,400 By Consignment a/c 624

By Cash a/c [bal. fig.] 9,776

10,400 10,400

Workings:

1. Closing stock in respect of cases –

 Stock = [50 – (2-1) – (1300/40)] = 16.5

2. Closing stock in respect of bottles –

 Stock = [(50 x 40) – {(2 x 40) – 40} – 1300] = 660

3. Valuation of stock –

= [16.5 x 200] + [(200/50) x 16.5]

= 3,366

4. Abnormal loss –

 Basic cost [{(10,000 + 200) / 50} x 2] = 408

 Less, Salvage value [{(10,000 + 200) / 50} x (40/40)] = (204)
 Net loss = 204