BEAdvac 1 – BSA

STUDENT ACTIVITY
Week no: 6
SHEET

Name: ______________________________________________Score: _______________________________

Year and Section: ____________________________________Date: ________________________________

Diagnostic Test #4: Consignment Sales and Revenue from Contracts with Customers

Write your answers/solutions on the yellow paper and box your final answers. Do not write at
the back of your yellow paper and put a page number on every page of your solution.

I. Consignment Sales
A. A Company entered into a consignment arrangement with B Company. The arrangement
provides that B Company is entitled to 5% commission based on sales.
A Company manufactured 100 boxes of product at manufacturing cost of P200,000. On 02
July 2023, A Company shipped through a common carrier 30 boxes of consigned goods to B
Company. The common carrier collected the freight amounting to P3,000 from B Company.
For the year ended 31 December 2023, B Company sold on cash 20 boxes of consigned goods
to final consumers at A Company’s predetermined price of P3,000 per box.
1-3. What is the amount of the cost of sales relating to the boxes sold by B Company?
4-6. What is the net income of the consignor?
7-9. What is the amount of the net remittance by the consignee to the consignor?

B. B Company received 505 panjamas on consignment from A Company. The cost of each
pajama was P80, and they were priced to sell at P100. B Company’s commission on consigned
goods was 10%. Five pajamas remained at year-end.
10-12. In the year-end balance sheet, what amount should B Company report as payable for
consigned goods?

C. On 31 May 2023, A Company consigned 90 double deck beds to B Company for sale at
P1,600 each and paid P1,200 in transportation costs. A report of sales was received on 28 June
2023 from B Company reporting the sale of 20 double deck beds, together with a remittance
was net of the agreed 15% commission.
13-15. How much should A Company recognize as consignment sales revenue in May and
June 2023, respectively?
16-18. How much revenue should B Company recognize in profit or loss for year ending 30
June 2023?

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 BEAdvac 1 – BSA
STUDENT ACTIVITY
Week no: 6
SHEET

D. A Company consigned to B Company 12 refrigerators which cost P9,000 each. Freight out
was paid by the consignor in the amount of P600. B Company sold eight refrigerators,
rendered an account sales, and remitted the amount of P82,600 after deducting the following
from the selling price of the refrigerators sold:

Commission on selling price 12%

Selling expenses P1,200
Cost of fan motor free 1,400
Delivery and installation 2,800

19-22. What is the total selling price of the eight refrigerators sold?
23-25. What is the net profit of A Company from the consignment arrangement?

II. Revenue from Contracts with Customers

Theories (Refer to IFRS 15 or PFRS 15)
1. Give the five (5) - step approach of revenue recognition under IFRS 15.
2. Define contract.
3. Enumerate the criteria to be met in order for the contract to exist for purposes of revenue
recognition or enumerate the attributes of a contract.
4. For the purpose of applying IFRS 15, give the requirements in order for a contract to be
considered inexistent.
5. Define performance obligation.
6. Define transaction price.
7-8. Differentiate recognizing revenue over time and at a point in time.
9. Define distinct.
10-11. Give a difference between contract modification and combination of contracts.
12. Give the two conditions to recognize new contract.
13-14. Give a difference between contract asset and receivable.
15-16. Give a difference between costs to obtain a contract and costs to fulfil a contract.
17. TRUE/FALSE
If a customer pays, or an entity has a right to an amount of consideration before the entity
transfers a good or service to the customer, the entity shall recognize contract liability.
18. TRUE/FALSE
If an entity performs before the customer pays consideration or before payment is due, the
entity shall recognize contract asset, excluding any amount presented as receivable.
19. TRUE/FALSE

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 BEAdvac 1 – BSA
STUDENT ACTIVITY
Week no: 6
SHEET

Revenue recognition under PFRS 15 is based on transfer of title.

20. TRUE/FALSE
Performance obligation is satisfied when the promised good or service is transferred to a
customer.

Problems
A. On 01 August 2022, C Company entered into a contract of sale with B Company. The
contract is structured such that C Company must deliver the goods on 30 September 2022
and B Company must pay P80,000 on 31 October 2022. The cost of the goods transferred is
P65,000.
1-6. Prepare journal entries: 01 August 2022, 30 September 2022, 31 October 2022

B. On 01 August 2022, C Company entered into a contract of sale with B Company. The
contract is structured such that C Company must deliver the goods on 31 October 2022 and
B Company must pay P80,000 on 30 September 2022. The cost of the goods transferred is
P65,000.
7-12. Prepare journal entries: 01 August 2022, 30 September 2022, 31 October 2022

C. On 05 January 2023, C Company enters into a contract with A Company for the sale of two
items for P50,000 each.
The contract requires Item 1 to be delivered on 15 February 2023 and states that the payment
for the delivery of the Item 1 is conditional on the delivery of the Item 2.
Item 2 is delivered on 29 July 2023 and the payment for the two items was received on 15
September 2023.
13-20. Prepare journal entries: 05 January 2023, 15 February 2023, 29 July 2023, 15 September
2023

D. C Company has a contract to sell 50,000 boxes of PS-5 to a customer for P10M or P200 per
boxes over a three-month period.
After the delivery of 30,000 boxes, C Company modifies the contract by promising to deliver
additional 10,000 boxes of PS-5 for an additional P1.8M or P180 per boxes (which is the
standalone selling price of the products at the time of contract modification). C Company
regularly sells the products separately.
21-23. Determine the total revenue to be recognized after the modification.
24-26. Determine the revenue that must be recognized if C Company delivers 5,000 boxes of
PS-5 to satisfy the original contract.

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 BEAdvac 1 – BSA
STUDENT ACTIVITY
Week no: 6
SHEET

27-29. Determine the revenue that must be recognized if C Company delivers 5,000 boxes of
PS-5 to satisfy the new performance obligation.

E. C Company has a contract to sell 50,000 boxes of PS-5 to a customer for P10M or P200 per
boxes over a three-month period.
After the delivery of 30,000 boxes, C Company modifies the contract by promising to deliver
additional 10,000 boxes of PS-5 for an additional P1.8M or P180 per boxes (which is the
standalone selling price of the products at the time of contract modification). C Company
does not regularly sell the products separately.
30-32. Determine the total revenue to be recognized after the modification.
33-35. Determine the revenue that must be recognized if C Company delivers 5,000 boxes of
PS-5.

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