2AAC

CONSIGNMENT SALES
THEORY. Multiple Choice 25%

1. Both the consignment in account and consignment out account were credited for P12,000. This
represents revenue earned from the viewpoint of
a) both consignee and consignor
b) consignor only
c) consignee only
d) some deductions from both parties should be made first
Answer B

2. In consignor’s book a partial remittance is recorded as a debit to cash and the uncollected account as
a) due from consignee c) inventoriable cost
b) deferred cost d) due to consignor
Answer A
3. Consignor paid freight on goods consigned which were not sold. This should not be part of the
a) Consignment expenses c) inventoriable cost
b) balance of consignment out d) balance of consignment in
Answer A the rule is if unsold cost of shipment, shipping cost and freight in should be allocated

4. When goods on consignment are returned, these goods will be included by the
a) consignor until it is sold by the consignee
b) consignor in its regular merchandise inventory account
c) consignee until it is sold
d) consignor in its Merchandise Inventory on Consignment account.
Answer B babalik sa consignor bodega and included as regular stock again

5. Nine of the ten consigned goods were sold and one was returned to consignor. A debit balance in
the consignment out account will represent
a. consignment loss
b. inventoriable cost
c. merchandise inventory-consignment
d. deferred consignment expenses
Answer A… nine sold and one returned e di walang natira. Consignment Out balance will represent
either a loss pag debit balance (cost and expenses more than the credit to sales)

6. The consignment in account has a credit balance of P10,000 after remittance was made by
consignee. This represents
a. Sales made by consignee
b. Unsold goods in the hands of consignee
c. Amount still due to consignor
d. reimbursable expenses not yet charged to consignor
Answer C after remittance dapat zero balance na otherwise it means nag partial lang so there is still
amount payable to consignor.

151
7. Only eight of the ten consigned goods shipped to consignee were sold. A debit balance in the
consignment out account will represent
a) consignment loss
b) inventoriable cost
c) amount still due from consignee
d) advances received from consignee
Answer B pag may unsold the consignment out will still have a debit balance representing
inventoriable cost in the hands of consignee
8. Consignee paid freight on goods returned. This freight should form part of
a. Consignor’s expenses chargeable against revenue
b. inventoriable cost of consignor
c. freight expense of consignee
d. deferred consignment cost of consignor
Answer A

9. Goods still in the hands of consignee should form part of

a. Consignee’s inventory separately titled Inventory- on consignment
b. Consignor’s inventory if method used is consignment profit not determined separately
c. Consignor’s inventory if method used is perpetual inventory method.
d. Consignor’s inventory regardless of method used in recording consignment profit
Answer D refer to no 7 even if in consignee’s hands, it is owned by consignor and should be part of
inventory regardless of method used.
10. For determining correct consignment profit, which of the following should be allocated
between consigned goods sold and goods still in the hands of consignee?
a) cost of goods shipped, shipping cost, delivery expense, commission
b) shipping cost, cartage in, installation, delivery expense
c) cost of goods shipped, shipping cost including import duties and insurance, freight in
d) cost of shipment, shipping cost, cartage in, freight out
Answer C look for allocable costs only, di pwede kasama yong mga delivery expense, commission,
installation pang sold units lang ito.
11. Consigned goods returned by the consignee should be recorded by consignor by
a) Debiting this to merchandise shipment on consignment
b) Crediting this to merchandise shipment on consignment
c) Debiting this to merchandise inventory- Consignee
d) Debiting this to consignment out
Answer A debit consigment out and credit merch shipment pag nag ship, reverse entry pag may
return parang ibig sasbihin balik ulit sa consignor. Memorize the entries.
12, 13 and 14 are based on the following:
Consignment Out - Bless Inc.
Shipment cost P50,000 Net Sales (3 sets net of 10% P27,000
Freight for 10 sets shipped 5,000 com)
Cartage In P 1,500
Delivery 600
12. Unit sales price is
a) P10,000 b) P9,000 c) P3,000 d) P5,000

152
 ANSWER A 27,000/.9= 30,000 /3 sets= 10,000 per set

13. Remittance should be

a) P25,000 b) P24,900 c) P20,000 d) P22,000
ANSWER B 27,000-1,500-600

14. Profit or loss of consignor is computed as follows:

a) 27,000 – 15,000- 1,500- 450- 180
b) 27,000 – 50,000 – 1,500- 1,500- 600
c) 27,000 – 15,000 cost of goods- 1,500 shipping cost- 450cartage in – 600delivery
d) 27,000- 15,000-3,000-1,500- 450- 600
ANSWER C
15. Applying PFRS 15, consignee recognizes revenue when consigned goods are
16. received from consignor and displayed in the store. c) sold by consignor to customers
17. shipped by consignor d) sold by consignee to customers and receives payment
Answer D di ba nasa kamay ng consignee e di siya ang magbebenta and receive payment
16. The title Merchandise Shipment on Consignment is closed in consignor’s book at the end of the
accounting period to determine
a) total cost of goods sold c) total cost of goods shipped
b) regular cost of goods sold d) total cost of goods returned
Answer B
Explanation: consignor sells on two terms: regular and on consignment. So my title siyang sales,
purchases, inventory beg, inventory end. Assume you shipped goods on consignment of P50,000. If
your closing entry is (assumed figures):
Invty End 120,000
Cost of Sales or Inc Sum (total cost of sales) 180,000
Invty Beg 75,000
Purchases 225,000
Why is this wrong, kasi yong cost of sales para sa consignment sales nakahiwalay na sa title
Consignment Out, kaya we use the method called Consignment Profit Determined Separately. So para
di na lalabas sa regular cost of sales, yong Merchandise Shipment On Consignment na credit when you
shipped to the consignee of P50,000 should now be closed to the debit side:
Invty End 120,000
Merchandise Shipment on Consignment 50,000
Cost of Sales (regular) 130,000 (di na 180,000)
Invty Beg 75,000
Purchases 225,000
17. If consignee did not make a full remittance, which account will have a debit balance?
a) Consignment In c) Due From Consignee
b) Consignment Out d) Due To Consignor
Answer C same concept as no 2 above.
18.Consignee SM Inc. made a full remittance of P10,000 to Manufacturer after deducting consignment
expenses of P5,000 and a 20% commission on sales. The consignment sales amounted to
a) P15,000 b) P20,000 c) P22,500 d) P18,750

153
 Answer D

Analysis: reconstruct your account sales

Sales (100%) ??
Less 20% commission xx
Net Sales 80% xx 15,000
Less Consignment Expenses 5,000
Remittance 10,000

Reverse procedure, work back 10+5= 15/.8= 18,750

19. Refer to no. 18. Total to be debited by Manufacturer to consignment out representing charges of
consignee amounted to
a) P5,750 c) P5,000
b) P8,750 d) P3,750
Answer B

Analysis: Again you need the account sales: commission 18,750 x .2= P3,750
+ consignment expenses 5,000
Total charges of consignee=P8,750

20. Consignee was required to give a 25% advance on merchandise consigned based on total cost of
P120,000 for 10 sets. Consignee was to sell this at a gross profit rate of 50%. Consignment
expenses paid by the consignee amounted to P45,000 including a 20% commission charged for
P14,400.
Prepare an account sales and answer the following:

Consignment sales must have been Sales *P72,000

a) P72,000 c) P100,000 CE 45,000
b) P150,000 d) P180,000 For remit 27,000
Answer A Advances ** 9,000 3,000 x 3
Remittance 18,000

*14,400/.8= = 72,000
**.25 x 120,000= 30,000 total advances/10= 3,000 per set x 3 = 9,000

21.Refer to no 20. Amount to be remitted after deducting advances

a) P3,600 c) P12,600
b) P18,000 d) P27,000
Answer B

Amount to be remitted before deducting advances for 2BAC answer is D P27,000

22. Refer to no. 20. Consignor must present in the balance sheet current liability section
e) Advances from Consignee P17,500 c) Due to Consignee P21,000
f) Advances to Consignee P12,500 d) Due from Consignee P30,000
Answer C

154
 3,000 x 7 units still on hand = 21,000

23. The consignee has a right over consignment sales to receive a 20% commission. At the
end of March, after preparing an account sales, the consignment in account has a debit
total of P60,000 including remittance and a credit total of P75,000.

      The balance of P15,000 represents…….. Answer: obligation to pay consignor

24.
1. Consignor should treat consignment expenses paid by consignee related to
consigned goods returned immediately as expenses to be deducted from the
consignment sales. True

2. The above consignment expenses are generally deducted from consignment in to

decrease obligation to pay  by the consignor. False dapat consignee

25.

1. The Consignment In account is a real account, debited to charge consignor for

reimbursable expenses and credited to charge consignee for sales withheld.T

   2. The consignment In account after deducting the required deposit will reflect a zero
balance. False required deposit advances lang ito dapat required remittance para
magzero balance.

26.
The consignment out account has a total debit of P40,000 and a credit total of P50,000 before the
inventoriable costs were determined. If the total inventoriable costs is P7,500, how much is the
consignment profit?
Answer 17,500 40 = 50- 7.5 or 40-7.5= 32.5-50=17.5

27. Two sales arrangements are described below as consignment arrangements:

       Avon has a web-side which displays an array of products from different suppliers
and from which customers could choose from. Avon arranges the deal between the
supplier and the customer. The price is fixed by the supplier and the merchandise
delivered by the supplier direct to the customer. Avon also makes the necessary
arrangement on how supplier will be paid. The purchase is non- refundable, and after
the sale is fixed by Avon, it has no further responsibility. The merchandise is delivered
by the supplier and Avon receives 10%  of the agreed sales price.  
      Acer has a web-side which displays an array of raw materials which can be
manufactured into different electronic gadgets based on customer’s specification. The
plan is discussed between the interested customer and Acer, and upon finalization, the
price is fixed and requirement for installation agreed upon. Acer looks for a

155
subcontractor, Real Co as installer, who charges Acer for a certain price. Acer’s profit is
based on the difference between price charged by Real Co and the price agreed upon
by the customer and Acer. Any defect is a responsibility of Acer, although warranty is
given by the supplier. 
Answer: Only the first arrangement is a consignment sales.

28. Seven of the ten consigned goods shipped to consignee were sold while one set
was recalled by consignor. All these were recorded by consignor including remittance
and the result of the consignment sales. The consignment out account still has a debit
balance of P15,000 which will represent
Option A Consignment loss.
Option  B Inventory cost and deferred consignment expenses for two sets.
Option C Inventory cost for two sets and deferred consignment expenses for three
sets.
Option D inventory cost for two sets and deferred consignment expenses for one set.
ANSWER OptionB there are 2 unsold inventoriable cost consists of inventory cost and
deferred consignment expenses.

29. The consignment out account has a debit total of P65,000 and a credit total of
P50,000 before the inventoriable costs were determined. If the total inventoriable
costs is P10,000, how much is the consignment profit or loss?
 65-10=55 debit is still higher against credit of 50,000= 5,000 loss ANswer
Pagminus inventoriable na, balance of CO will either be a profit or loss.

PROBLEMS 2AAC

A. The Consignment Out account in the books of Pasig Company is shown below. Among the things
agreed upon was a 15% commission, all expenses reimbursable, with Pasig fixing the sales price at
150% of cost, a policy for both regular and consignment sales
Consignment Out- Manila Company
Merchandise shipped (12 units) P120,000 Sales (6 units) ?
Shipping cost 6,000 Returns (2 units) ?
Charges of consignee:
Freight In 3,000

156
 Delivery expenses 4,500
Freight for returns 2,000
Commission ?
Required:
a) Entries of Manila Co to record 1) sales with commission, and 2) remittance if P15,000
was not remitted representing uncollected accounts.
b) Entry of Pasig to record the remittance based on the account sales received.
c) Analysis of costs and expenses.
Answer the following:
1. How much was remitted by Consignee? 52,000
2. Consignment profit amounted to? 4,000
3. Inventoriable cost amounted to? 43,000
4. You are given the following additional data in the books of Pasig:
Inventory, Beg 150,000
Inventory, End 80,000
Purchases 170,000
How much was the total regular sales of the company for the same period.
Regular cost of sales 320,000-80,000-100,000= P140,000 x 150%= Regular sales P210,000.

Account Sales 120/12= 10 x 6= 60,000 cost x 1.5 = Sales 90,000

Charges 9,500
Commission 13,500
Remittance 67,000
Remitted 52,000
Amount still due 15,000

Sales 90,000
Cost 120,000 x 6/12 (60,000)
Expenses 6,000 + 3,000=9,000 x 8/12= (6,000)
Com,/ Del/ Freight for returns 4.5+13.5+2 (20,000)
Profit 4,000

Inventoriable cost 120,000 +6,000 +3,000=129,000 x 4/12 = 43,000

To prove inventoriable CO debit side 120 cost +15.5 + 13.5 + 4 profit – 90 sales -20 returns= 43
PROBLEM B. 3 x 5= 15%
Refer to Problem A. The consignee was able to sell 2 more sets the following year, and prepared an
account sales and made a full remittance after deducting charges for consignment expenses.
a. Prepare the account sales. How much should be remitted? 39,000
b. Record in consignor’s book the remittance upon receipt of account sales.
c. Consignment Profit of consignor. 2,500
d. Total of the balance sheet accounts related to the consignment in consignor’s book. 21,500

120/12= 10 x 2= 20,000 cost x 1.5 = Sales 30,000

Charges Delivery 1,500
Commission 15% 4,500

157
 Remittance 24,000
Old account 15,000
Total for remittance 39,000

GP 30,000 sales-20,000 cost 10,000

Shipping and Freight 9,000 x 2/12 (1,500)
Delivery and com (6,000)
Profit 2,500

Inventoriable cost 20,000 + shipping and freight 1,500= 21,500

43,000 + 6,000 + 2,500 – 30,000= 21,500

Problems C
CONWAY Manufacturing Co consigned to CD Appliance Corporation, 10 Sony colored TV sets.
Each set costs P25,000 each. Freight out was paid by the consignor in the amount of P3,600. CD
Trading was required to give an advance payment equal to 25% of the sales price. CD sold 3 TV
sets and rendered an account sales after deducting the following from the selling price of the 3 sets:

commission of 12% on selling price

freight in P 1,500
cost of antennae tape given free 1,400
delivery and installation 2,800
A remittance was received by Conway net of P45,000 advances for the sets sold.
Required: a. Commission amount P21,600
Compute first for the total Sales of CD Appliance Corporation
Clue: P45,000 advances deducted in the account sales for the sets sold.
b. Remittance. Prepare an Account sales P107,700
c. Entry of CD and Conway to record remittance.
d. Consignment profit of Conway. 77,670
e. T account Consignment Out, identify postings, give the
balance. Prove by giving the inventoriable costs. 178,570
e. Balance sheet account(s) of CD. In the SFP of CD, there should be an Advances to Consignor in
the amount of P105,000
f. Two current asset accounts should be in the SFP of Conway, one of which will be Deferred
Consignment Expenses amounting to P3,570.

Sales 45,000 advances for the 3 sets /.25= 180,000

Charges Com 21.6+ freight 1.5 cost of tape 1.4 +del 2.8 27,300
For remittance 152,700
Advances 45,000
Remitted 107,700

Sales 180,000
Cost 75,000
Shipping 360 x 3 1,080
Consignment expenses 26,250 21.6+450+4.2

158
Consignment profit 77,670

Inventoriable: cost 25 x 7 175,000

Shipping 360 x 7 2,520
Freight 150 x 7 1,050
Total 178,570

To prove: 250,000 + 3,600 + 27,300 + 77,670-180,000= 178,570

PROBLEMS FOR 2BAC

Barbie Co. consigned to May Co the following merchandise which sales price is 200% above
cost: 5 units of Sony aircon costing P4,000 per unit with total freight paid of P3,000. One
month after, May Co rendered an account sales as follows:

Account Sales Sold Unsold

No. of units sold                                      3 x 12,000                   36,000 36,000

Cost of shipment (12,000) 8,000

Shipping cost (1,800) 1,200

Cartage In                                                 P500  per set                (2,500) ( 1,500 ) 1,000

Delivery                                                       a total of P3,500        (3,500) (3,500)

Promotion                                                P5,000                           (5,000) (5,000)

Commission 15% of sales                                                              (5,400) (5,400)

11,800

Profit 6,800

Inventoriable cost 10,200

          20,000 + 3,000 +2,500+ 13,900 +6,800 - 36,000=  10,200                   

Required: Construct T accounts for Consignment In and Consignment Out , properly labelled.
Table determining consignment profit, a computation for inventoriable cost. 

 Consignment In Credit side 36,000

Consignment In debit side 2,500

159
 3,500
5,000
5,400 16,400
For remittance 19,600
Advances 6,000

The following represents the account for goods consigned to Bless  Inc. for the month of
December:  

                                                          Consignment Out - Bless Inc.

Shipment cost                                      P120,000 Sales (6 sets for a 15% com) P??? 

Freight for 12 sets shipped     6,000    

Cartage In     3,000    

Delivery     4,500    

Sets were sold at 150% of cost.  2 sets were returned and Bless paid P2,000 for this. Bless has
not remitted P15,000 of the required remittance.  

Required: Prepare an account sales.

Sales 120,000/12= 10,000 x 1.5= 15,000 x 6= 90,000 Sales 90- Cost 60 = GP 30,000

Commission (13.500) -13,500

Cartage, delivery, returns (9,500) Freight 6,000 x 8/12 - 4,000

Cartage 3,000 x 8/12 - 2,000

Delivery and returns - 6,500

Not remitted (15,000)

Remittance 52,000 Profit P4,000

Inventoriable cost 120,000 + freight and cartage 9= 129,000 x 4/12= 43,000

January:
2 more sets sold 15 x 2= 30,000 x .85= 25.5 -1.5=24,000 + 15,000 old acct=39,000 remit Jan
Sales 30,000 – COS 20,000 = GP10,000-1,000 ship -500 cart -4.5 com-1.5 delivery=2,500 profit
Deferred consignment expenses freight and cartage 9x 2/12= 1,500

160