Students kindly note, before solving the problems stated below kindly look into the video which

was sent long back about the

introduction of the consignment accounts.

Question and answer is given after explanation

Kindly look into the problem, understand and solve it…

Before starting, kindly look into the Question and understand….

In this problem, Anand is consignor and Jeevan is consignee….

Kindly note: While explaining the question my explanation and the journal entries what is there in the solution may vary in
terms of order only

First sentence of the problem goes like this…..

Journal entries in the books of Anand (consignor)

 Anand sent 100 pieces of shirting to Jeevan on consignment,

Consignment A/C (100x40) Dr 4000

To Goods sent on consignment A/c 4000
(Being goods sent on consignment)

(100 pieces of shirting was sent on consignment at Rs 40)

 The consignee is entitled to receive 5% commission & expenses.

Consignment A/c (6,000x5%) Dr 300

To Jeevan’s A/c 300
(being commission due to Jeevan)

Here commission is due ( not yet paid by Anand) to Jeevan (consignee) up to Rs 300 (i.e., on sales made by Jeevan up to Rs.
6000 at the rate of 5%)

 Jeevan paid the following expenses: Railway freight Rs.200 & Godown rent Rs. 100.

Consignment A/c Dr 300

To Jeevan’s A/c (200+100) 300
(Being expenses incurred by consignee)

Here since you are preparing journal entry in the books of Anand, the expenses incurred by Jeevan are recorded as above.

 Anand drew on Jeevan a bill for Rs. 2,000 which was duly accepted by Jeevan.

Bills Receivable a/c Dr 2000

To Jeevan’s A/c 2000
(Being advance received)

Here the bills receivable is drawn by Anand on Jeevan and was duly accepted by Jeevan up to Rs 2000
 The bill was discounted for Rs. 1,940

Bank A/c Dr. 1940

Discount on bills discounted A/c Dr. 60
To bills receivable A/c 2000
(Being bills discounted)

Here the bills receivable which was drawn by Anand on Jeevan was discounted by the banker when deposited for payment by
Anand. (here 2000 is received by Anand from the banker at the discounted rate when bill is deposited to banker by Anand
which was given by Jeevan)

 The bill was discounted for Rs. 1,940.

P&L A/c Dr 60
To discount on bills discounted 60
(being discount on bills discounted charged to P&L A/c)

Here the bill was discounted for Rs 60 (2000-1940) (2000 was the value of the bill and 60 is the discount charged), which is
transferred to P&L a/c.
 Jeevan sent an account sale to Anand reporting that all the goods were sold for Rs. 6,000.

Jeevan’s A/c Dr 6000

To consignment A/c 6000
(being goods sold on consignment by Jeevan)

One last journal entry is pending which is recorded only once Consignment account is prepared…

Now consignment account is prepared were all the journal entries which were recorded is transferred to consignment account
(which is a ledger account)

 The balance what is found under consignment account is transferred to P&L account

Consignment A/c Dr 1400

To P&L A/c 1400
(being profit on consignment transferred)
Consignment at cost Price without closing stock:
PROBLEM 2:
Anand sent 100 pieces of shirting to Jeevan on consignment, the consignee is entitled to
receive 5% commission & expenses. The cost of shirting to Anand is Rs. 40 plus
expenses. Jeevan paid the following expenses: Railway freight Rs.200 & Godown rent
Rs. 100. Anand drew on Jeevan a bill for Rs. 2,000 which was duly accepted by Jeevan.
The bill was discounted for Rs. 1,940. Jeevan sent an account sale to Anand reporting
that all the goods were sold for Rs. 6,000. Pass the necessary journal entries and prepare
consignment a/c.

Solution:

Journal entries in books of Anand (consignor)

Date PARTICULARS DEBIT CREDIT

1. Consignment A/C (100x40 Rs. Rs.

To Goods sent on consignment A/c 4,000
(being goods sent on consignment 4,000

2. Consignment A/c 300

To Jeevan’s A/c (200+100)
(Being expenses incurred by consignee) 300

3. B.R a/c 2,000

To Jeevan’s A/C
(being advance received) 2,000

4. Bank A/c Dr. 1,940

Discount on bills discounted A/c Dr. 60
To bills receivable A/c 2,000
(being bills discounted)
5. P&L A/c Dr 60
To discount on bills discounted 60
(being discount on bills discounted charged
to P&L A/c)
6 Jeevan’s A/c Dr 6,000
To consignment A/c 6,000
(being goods sold on consignment by
Jeevan)
7. Consignment A/c (6,000x5%) Dr 300
To Jeevan’s A/c 300
(being commission due to Jeevan)
8 Consignment A/c Dr 1,400
To P&L A/c 1,400
(being profit on consignment transferred)
 Consignment of A/c
Particulars Rs Particulars Rs.

To goods sent to cons 4,000 By Jeevan’s A/c 6,000

To Jeevan’s A/c (exp) 300
To Jeevan’s A/c (con) 300
To P/L A/c 1,400
6,000 6,000