INTEGRATION: ADVANCED FINANCIAL ACCOUNTING AND REPORTING

CONSIGNMENT SALES

PROBLEM 1
XYZ shipped 100 units of its inventories to RST on consignment. Each unit costs P450 and has a standard retail price of P750. The 100
units had a freight in charge of P3,750. After a month, RST returned 10 units of inventory and remitted P32,850 cash to XYZ together
with account sales with the following items included:
 Commission of 20%
 Cartage on consigned goods, P750
 Marketing and promotional expenses, P1,500
 Delivery to customer and installation, P900

1. How many units were sold by RST?

2. How much is the cost of delivery still out on consignment at the end of the month?
3. How much is the total consignment profit or (loss) recognized by XYZ?

PROBLEM 2
DEF consigned 10,000 products to HIJ costing P72 each and can be sold for P120. The consignment agreement provides that DEF is
entitled to a 15% commission on the sales, but is required to make an advance equivalent to 60% of the cost of the goods. The advance
made is to be recovered through reduction from the monthly remittance, the amount of which is proportionate to the number of goods
sold. At the end of the month, the account sales showed the following information:
 Commission charges, P27,000
 Freight out, P18,000
 Advertising costs, P9,000

1. How much was the total remittance made by HIJ for the month?
2. How much is the total consignment profit or (loss) recognized by DEF?

PROBLEM 3
On December 1, 2023, ABC Inc. delivered 10 boxes of loaf bread and 10 packs of sample bread, for tasting purposes, to 24/7 a retail
store on a consignment arrangement. The retails store does not take title to the products and has no obligation to pay ABC Inc. until they
are sold to the final customers. Any unsold products, excluding those that are lost or damages, can be returned to ABC Inc. and the latter
has discretion to call products back or transfer products to another customer.

ABC Inc. manufactures the product at a cost of P5,000 per box of loaf bread and P100 per pack of sample bread. There is freight collect
of P2,000 for the delivery of 10 boxes of loaf bread to retail store but none for the sample bread. The selling price of loaf product is P8,000
per box for cash sales and P10,000 per box for credit sales with a term of 2/10 n/30. The retail store is entitled to a 5% commission on
cash sales and 10% commission on net credit sales already collected. The retail store has the right to be reimbursed for the freight it
incurred for its delivery to final customers. ABC Inc. provides bad debt expense at an estimate of 8% based on ending receivables.

For the month ended December 31, 2023, retail store was able to sell to final customers 3 boxes of loaf bread on cash basis and 5 boxes
of loaf bread on account. The freight prepaid of P3,000 for the delivery of boxes of loaf bread to final customers. Also, five packs of
sample bread were consumed by final customers during the tasting period. The customer on account paid to retail store three out of five
boxes sold in credit within the discount period but the remainder continued to be unpaid as of December 31, 2023. At December 31,
2023, retail store made its net remittance to ABC Inc.

1. Under IFRS 15, what is ABC Inc.’s net income for 2023 in connection with the consignment arrangement?
2. Under IFRS 15, what is the net remittance to ABC Inc. on December 31, 2023?

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