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Chapter Three

Accounting for Installment


and Consignment Sales
Contract
Accounting for Installment sales contract
Introduction
• Goods purchase by buyer by paying a small amount of
the total amount of goods at the time of purchase of
goods and agrees to pay the remaining amount in equal
installments in equal interval of time is known as
installment.
• The first time payment is known as “down payment”.
• In installment sales, the risk and rewards are transferred
to the buyer.
Cont’d
• In the ordinary credit sale, title passes unconditionally
to the buyer concurrently with the completion of the
sale (delivery).
• In contrast, in an installment sale, title remains
conditional until the debt is fully discharged.
Methods of Recognition of Profit on Installment Sales
• While many sales are in certain collection, some others
are uncertain.
• The degree of the uncertainty (on the collection) may
vary; some could be not so uncertain (with shorter time-
span) and others are heavily uncertain.
• So, how do we treat sales when collection is uncertain,
under the IFRS?
Cont’d
• According to IFRS for recognizing revenue under the accrual
basis of accounting, revenues are recognized when realized
or realizable and earned when the products are delivered or
services are performed.
• In addition, expenses related to that revenue should be
recognized and matched against the revenue.
• The question here is whether to recognize the gross profit
from installment sales are recognized in full in the accounting
period in which the sale made or spread over the term of the
installment contract.
Cont’d
•The determination of the point in time when a reporting entity is
considered to have transferred the significant risks and rewards of
ownership in goods to the buyer is critical to the recognition of
revenue from the sale of goods.
•However, in installment sales, where receivables are collectable
over an extended period of time and there is no reasonable basis for
estimating the degree of collectability.
Cont’d
•Because of the uncertainty involved in collecting the accounts to be
received over an extended period of time may suggest the
postponement of revenue recognition until the probability of collection
can be reasonably estimated.
•According to IFRS, two methods are used to record the installment sales when
the collection of those sales is uncertain:
(a) Installment method; and
(b) cost recovery method.
a. Sales Under the Installment Method
• The installment method places emphasis on collection of cash,
rather than the period of sale.
• Revenue realization is proportionate to collection.
• Under the installment method, both revenue and the associated cost
of goods sold are recognized at the time of the initial sale, but gross
profit recognition is deferred until cash payments are received.
• Thus, under the installment-sales method, each collection on an
installment account is regarded as a partial recovery of cost and a
partial realization of gross profit (margin) in the same proportion
that these two elements are present in the original selling price.
Cont’d
•In the application of the installment-sales method, most companies
record operating expenses without regard to the fact that some portion
of the year’s gross profit is to be deferred revenue.
• This is often justified on the basis that:
1) These expenses do not follow sales as closely as does the cost
of goods sold, and
2) Accurate apportionment among periods would be so difficult
as not to be justified by the benefits gained.
Example: To illustrate the installment sales method of
accounting, assume the following data for XYZ enterprise:
  2005 2006
Installment sales $250,000 $240,000
Cost of Installment sales (190,000) (168,000)
Gross Profit 60,000 72,000
Gross profit rate 24% 30%
Cash received:    
From 2005 sales 100,000 150,000
From 2006 sales __ 80,000
Required: Determine the realized and deferred gross profit and pass the
necessary journal entries at the end of each year using installment
method
Solution:
1. To record installment sales
2005 2006
Installment A/Receivable................. 250,000 240,000
Installment sales ......................... 250,000 240,000
2. To record cost of goods sold
2005 2006
Cost of Installment sales .................. 190,000 168,000
Inventories .............................. 190,000 168,000
3. To record deferred gross profit
2005 2006
Installment Sales ............................... 250,000 240,000
Cost of Installment sales .......... 190,000 168,000
Deferred gross profit ................ 60,000 72,000
Cont’d
4. To Record cash collections on installment receivables
2005 2006
Cash........................................................... 100,000 230,000
Installment A/Receivable (2005) ............... 100,000 150,000
Installment A/Receivable (2006) ............... _ 80,000
5. To record realized gross profit on installment sales
2005 2006
Deferred Gross Profit (2005) ................. 24,000 36,000
Deferred Gross Profit (2006) ................. - 24,000
Realized Gross Profit .............. 24,000 60,000
6. To close the realized gross profit to income summary
2005 2006
Realized Gross Profit ..................... 24,000 60,000
Income Summary................. 24,000 60,000
Defaults and Repossessions
•To protect the sellers against the greater risk of uncollectability, sellers of real
or personal property on installment basis generally select a form of contract
called security agreement that enables them to repossess the property if the
purchaser fails to make payments.
•Repossessed merchandise should be recorded in the repossessed merchandise
inventory account at it fair value.
•The objective is to put any asset reacquired on the books at its fair value or
when fair value is not ascertainable, at the best possible approximation of fair
value.
Cont’d
•Example: Assume ABC Company's total installment sales for the year
2014 is $80,000 with a gross profit rate on installment sales of 30%. In
2015, a customer defaults on a contract for $1,500 that had originated in the
year 2014. A total of $800 had been collected on the contract in 2014 prior
to the default. The merchandise sold is repossessed and its fair value to the
company is $360, allowing for reconditioning costs and a normal gross
profit on resale. The journal entry to record the default and repossessions is
as follows:
Cont’d
Merchandise- Repossessions .................................... 360
Deferred gross profit- 2014 (700 X 30%)................. 210
Loss on Repossessions (700 - (360 + 210) ................ 130
Installment contract receivable .................. 700
Illustration: The selected balances of ABC Co. Installment Sales are as
follows:
  2007 – Jan. 1 2007 – Dec. 31
Installment accounts receivable – 2005 90,000 -
Installment accounts receivable – 2006 285,000 135,000
Installment accounts receivable – 2007 - 337,500
Deferred gross profit – 2005 22,500 18,750
Deferred gross profit – 2006 85,500 85,500
Installment sales - 450,000
Cost of installment sales - 306,000
Repossessed merchandise - 2,000
Installment accounts receivable – 2005 - 15,000
cancelled on Repossession
Cont’d
•Required
a. Determine gross profit realized during 2007.
b. Prepare the necessary journal entries including adjusting entries during
2007.
Solution:
• Determining realized gross profit
• Computation of Deferred Gross Profit (DGP) (2007):
Deferred gross profit = Installment sales – Cost of installment sales
Deferred gross profit = 450,000 – 306,000
Deferred gross profit = 144,000
• Computation of Deferred Gross Profit Rate (DGP%):

gross profit rate (2007)= 32%


Cont’d

• 

gross profit rate (2006) = 30%


 

gross profit rate (2005) = 25%


Cont’d
• Computation of Cash Collection in 2007:
Cash Received:
From sale of 2007
Cash collection (2007) = Installment sales – Installment accounts receivable (ending)
Cash collection (2007) = 450,000 – 337,500
Cash collection (2007) = 112,500
From sale of 2006
Cash collection (2006) = Installment A/R (Beg) – Installment A/R (End)
Cash collection (2006) = 285,000 – 135,000
Cash collection (2006) = 150,000
From sale of 2005
Cash collection (2005) = Installment A/R (Beg) – Installment A/R (End) – Installment
A/R cancelled
Cash collection (2005) = 90,000 – 0 – 15,000
Cash collection (2005) = 75,000
Cont’d
Computation of Realized Gross Profit During 2007:
Realized gross profit = Cash collection X DGP%
Realized gross profit (2007) = 112,500 x 32% = 36,000
Realized gross profit (2006) = 150,000 x 30% = 45,000
Realized gross profit (2005) = 75,000 x 25% = 18,750
Total realized gross profit during 2007 = 99,750
Journal entries including adjusting entries during 2007
1. To record installment sales
Installment A/Receivable................. 450,000
Installment sales ..................... 450,000
2. To record cost of goods sold
Cost of Installment sales................. 306,000
Inventories............................. 306,000
3. To record deferred gross profit
Installment Sales .......................................... 450,000
Cost of Installment sales ...................... 306,000
Deferred gross profit ............................ 144,000
Cont’d

4. To Record cash collections on installment receivables


Cash ................................................................... 337,500
Installment A/Receivable (2005) .................................75,000
Installment A/Receivable (2006) ............................... 150,000
Installment A/Receivable (2007) ............................... 112,500
5. To record realized gross profit on installment sales
Deferred Gross Profit (2005) ................... 18,750
Deferred Gross Profit (2006) .................. 45,000
Deferred Gross Profit (2007) .................. 36,000
Realized Gross Profit ........................ 99,750
6. To close the realized gross profit to income summary
Realized Gross Profit.......................... 99,750
Income Summary ........................ 99,750
Sales under the Cost Recovery Method
• Under the cost recovery method, recognition of all gross profit is
delayed until cash payments have been received that equal the entire
cost of goods sold.
• The cost recovery method is the more conservative method and used
when the collection of sales is highly uncertain.
Cont’d
• Example:
• Shiny clothes Ltd. Is a retail store that recently purchased inventory
costing $100,000. The retail store sells its inventory to multiple
customers for a total sale price of $130,0000. The retail store made
sales of $ 100,000 at period 0 and receive cash flows from sales of
$50,000,$60,000 and $20,000 in the following three periods. Profit for
the sale of inventory method under cost recovery method would be
recognized as follow.
Consignment Sales Contracts
• The sales activity of any business may be handled directly through own
salesmen or indirectly through agents.
• One way of indirect selling is selling through consignment agents.
• Consignment takes place where goods are transferred from the owner
(consignor) to an agent (consignee) for the purpose of sale by the
consignee on behalf of the consignor.
• The relationship between consignor and consignee is that of Principal-
Agent relationship.
• Because of this agency relationship, ownership of the goods does not
transfer to the consignee.
Features of Consignment
• Objects:
• Ownership:
• Relationship:
• Risk:
• Expenses:
• Unsold Stock of goods:
• Commission:
• Possession:
• Repossession:
• Profit or loss:
Distinction between Consignment and Regular Sales
S/N Consignment Regular Sale

1. Ownership of the goods rests with the consignor till The ownership of the goods transfers with the transfer
the time they are sold by the consignee, no matter the of goods from the seller to the buyer.
goods are transferred to the consignee.

2. The consignee can return the unsold goods to the Goods sold are the property of the buyer and can be
consignor. returned only if the seller agrees.

3. Consignor bears the loss of goods held with the It is the buyer who will bear the loss if any, after the
consignee. delivery of goods.

4. The relationship between the consignor and the The relationship between the seller and the buyer is
consignee is that of a principal and agent. that of a creditor and a debtor.

5. Expenses done by the consignee to receive the goods Expenses incurred by the buyer are to be borne by the
and to keep it safely is borne by the consignor. buyer itself after the delivery of goods.
Accounting for Consignment Business
• The consignor and consignee keep their own books of
accounts.
• The consignor may send goods to many consignees.
• Also, a consignee may act as agent for many consignors.
• It is appropriate that both of them would want to know profit
or loss made on each consignment.
Books of the Consignor
• The transactions relating to each consignment are recorded
in such a way that the profit or loss of each consignment can
be ascertained separately.
• It requires the preparation of a special account known as
consignment account.
• A consignment account is a nominal account prepared to
find out the profit or loss of a consignment.
• Consignment A/C

 the cost of goods sent,


the amount of sales
expenses incurred by the
affected
consignor and consignee, and
Return of goods by
the commission due to the
consignee
consignee
• The account is debited with:
 the cost of goods sent,
expenses incurred by the consignor and consignee, and
the commission due to the consignee.
• But the account is credited with:
 the amount of sales affected
also with closing stock, if any, and
Return of goods by consignee
• The balance of this account is either profit or loss.
• Consignee’s A/C

 the amount of any


• the amount of sales advance received from him,
expenses incurred by him
affected by the and
consignee commission payable on
sales
• In addition to the consignment account, the consignor also prepares the
personal account of the consignee to ascertain the amount due by the
consignee.
• This account is Debited with:
 the amount of sales affected by the consignee
• Credited with:
 the amount of any advance received from him,
expenses incurred by him and
commission payable on sales
Situations Consignor’s Books
On sending goods to the consignee Consignment A/c …………..…... Dr
Goods Sent on Consignment….…… Cr
On expenses for sending goods (by the Consignment A/c …………..…... Dr
consignor) Cash/A/P……………………..…… Cr
On an advance made by the consignee Cash …………………………..… Dr
Consignee‘s A/c …....................….. Cr
On expenses incurred by consignee Consignment A/c …………..…... Dr
  Consignee‘s A/c …....................….. Cr
On sales made by the consignee Consignee‘s A/c …................…... Dr
  Consignment A/c ………….……... Cr
For consignee‘s commission Consignment A/c …………..…... Dr
  Consignee‘s A/c …....................….. Cr
Goods returned by the consignee Goods Sent on Consignment …… Dr
  Consignment A/c …………....…... Cr
Remittance of cash by the consignee in full Cash …………………………..… Dr
settlement Consignee‘s A/c …....................….. Cr
Books of the Consignee
• The only items needed in the consignee’s records will be found
from the account sales consignee sent to the consignor after the
goods have been sold.
• The consignee does not enter the goods received on
consignment b/c they never belong to the consignee.
• The consignee’s job is to sell the goods.
• It will keep a note of the goods, but not in its accounting records.
• consignor’s account

• Advance made by the


consignee
• Expenses incurred by
consignee
• Sales of goods by
• Commission due to the
consignee
the consignee
• Remittance of cash to the
consignor in full settlement
Situations Consignee’s Books
Goods received from the consignor No entry
Expenses incurred by the consignor No entry
Advance made by the consignee Consignor‘s A/c …….………..… Dr
Cash …......................................….. Cr

Expenses incurred by consignee Consignor‘s A/c …….………..… Dr


  Cash …......................................….. Cr

Sales of goods by the consignee Cash/Account receivables.....….... Dr


  Consignor‘s A/c …………..……... Cr

Commission due to the consignee Consignor‘s A/c …………....…... Dr


  Commission revenue …...........….. Cr

Returns of goods to the consignor No entry


Payment received from debtors Cash …………………………….. Dr
Account receivables …………….. Cr

Remittance of cash to the consignor in full Consignor‘s A/c ……..………..… Dr


settlement Cash …....................................….. Cr
• Illustration: On January 1, 2016 ABC Company consigned 50 TV sets at $2,000
each to Mama Traders for sale on commission at 10% on gross sales. ABC
Company paid $500 for packing, freight and insurance. Mama Traders took
delivery of the goods on 11th January, 2016, after accepting a 15 days bill for
$50,000 and paid $1,500 for carriage. They sold 40 TV sets at $2,500 and
balance for $2,600 each. Their sales expenses amounted to $2,000. On 31st
January, 2016, Mama Traders forwarded an account sale together with a draft
for the balance.
• Required: a) Prepare the necessary journal entries and ledger accounts in the
books of ABC Company and Mama Traders
• b) Prepare account sales rendered by mama Traders.
Solution:
Journal Entries and Ledger Accounts on the Books of ABC
Company (Consignor)
• Journal Entries
S/N Description Cr. Dr.

1. Consignment to Mama A/C ………………………………..... 100,000  


Goods Sent on Consignment….……………..… 100,000
(Sent goods on consignment to Mama Traders)
2. Consignment to Mama A/C .…………………………….…... 500  
Cash ……………………………………..…… 500
(Expenses incurred on the Consignment)
3. Bill receivable A/C …………………………………...……… 50,000  
Mama traders A/C ……………………………. 50,000
(Advance received from the Agent in the form of Bill)
4. Consignment to Mama A/C ………………………………..... 3,500  
Mama traders A/C ……………………………. 3,500
(Paid carriage and sales expenses by consignee)
5. Cash ……………………………………………………..…… 50,000  
Bill receivable A/C …………………………… 50,000
(The bill met on due date)

6. Mama traders A/C ……………………………………………. 126,000  


Consignment to Mama A/C ………….……..... 126,000
(Gross sale proceeds as per Account Sales)

7. Consignment to Mama A/C ………………………………..... 12,600  


Mama traders A/C ……………………………. 12,600
(Commission on gross sales payable @ 10%)

8. Consignment to Mama A/C ………………………………….. 9,400  


Profit and Loss A/c …………………………... 9,400
(Transferred profit on consignment to profit and loss A/c)
9. Cash ……………………………………………………..…… 59,900  
Mama traders A/C ……………………………. 59,900
(Amount received in draft along with account sales)

10. Goods sent on Consignment A/c …………………………….. 100,000  


Trading A/c ………………………………….. 100,000
(Goods sent on consignment A/c closed by transfer to
trading A/c)
• Ledgers
• Consignment to Mama Account
  Dr.   Cr.

Goods sent on Consignment A/c …… 100,000 Mama Traders A/c ………… 126,000
Expenses on consignment …………... 500 (Sale proceeds)
Mama Traders A/c:  
Carriage ………………….…… 1,500  
Sales expenses …………….…. 2,000 3,500
Mama Traders: Commission ……….. 12,600
P & L A/c (Transfer) ………….…,.… 9,400

126,000 126,000
Mama Traders Account
  Dr.   Cr.
Consignment to Mama A/c ………… 126,000 Bill Receivable A/c ………… 50,000
    Consignment to Mama A/c … 3,500
Consignment to Mama A/c … 12,600
Cash ………..………………. 59,900

126,000 126,000
Goods sent on Consignment Account

  Dr.   Cr.

Trading A/c (Transfer) ……………… 100,000 Consignment to Mama A/c … 100,000


Journal Entries and Ledger Accounts on the Books of Mama Traders
(Consignee)
Journal Entries
S/N Description Cr. Dr.
1. ABC Co. A/C.………………………………….……….…... 3,500  
Cash ……………………………………..…… 3,500
(Paid expenses on the Consignment received)

2. ABC Co. A/C ………………………………………...……… 50,000  


Bills payable A/C ………….…………………. 50,000
(Acceptance of bill drawn against the consignment)

3. Bills payable A/C ………………………………………..…… 50,000  


Cash ………………...………………………… 50,000
(The bill met on due date)
4. Cash …………………………………………………….……. 126,000  
ABC Co. A/C ………….……………….…..... 126,000
(Sales effected for the Consignment received)

5. ABC Co. A/C ……………………………..………………..... 12,600  


Commission revenue …………………………. 12,600
(Commission receivable on the goods sold)

6. ABC Co. A/C ……….…………………………………..…… 59,900  


Cash ……………………………………..……. 59,900
(Amount remitted as final settlement)
• Ledgers
• ABC Company A/c
  Dr.   Cr.

Cash (Expenses) …………………….. 3,500 Cash A/c (Sale proceeds) 126,000


Bills payable A/c ……………………. 50,000  
Commission A/c …………………….. 12,600
Cash (amount remitted) ……….....….. 59,900

126,000 126,000
Bills payable A/c

  Dr.   Cr.

Cash ……………… 50,000 ABC Co. A/c ………… 50,000


b) Account sales of 50 TV Sets received and sold on behalf of ABC Company

Particulars Amount
Sale Proceeds:    
40 TV Sets sold at $2,500 each ………… $100,000  
10 TV Sets sold at $2,600 each ………… 26,000 $126,000
Less: Expense:    
Carriage …………………………... $1,500  
Sales expenses ……………………. 2,000  
Commission @ 10% ……………... 12,600 (16,100)

Net proceeds …………………………………………. $109,900


Less: Advance (Bill) …………………………………. (50,000)
Balance sent by Draft ………………………………… 59,900
Unsold Stock at Balance Sheet Date
• Where all consigned goods are not sold by the end of the consignor‘s
financial year, it is necessary to obtain an ‘account sales’ from the
consignee.
• This is a document detailing particulars of transactions and the quantity of
unsold stock on hand at that date.
• The basis for valuation of this stock is cost price unless deterioration or
obsolescence requires the adoption of net realizable value.
• Determination of cost price involves a consideration not only of the
original purchase price of the goods but also of any expenses in
transporting the goods to the place of sale-the consignee‘s store.
• Expenses incurred by the consignee in selling the goods such as
advertisement, salesman‘s salaries and commission, storage, insurance
against fire or theft are not included in the valuation of unsold stock.
• These expenses do not relate to the goods unsold and are recorded as
marketing expenses.
• In other words it can be said that all direct expense or all expenses made
whether by the consignor or by the consignee in placing the goods in a
saleable condition will be taken into account while valuing the closing
stock.
• Illustration: Consider the previous illustration and assume that Mama
Traders Sold only 30 TV Sets at $2,500 and 20 TV Sets remain unsold.
• Required: a) Prepare the necessary journal entries and ledger accounts in
the books of ABC Company and Mama Traders
b) Prepare account sales rendered by mama Traders.
Solution:
•Journal Entries and Ledger Accounts on the Books of ABC Company (Consignor)
Journal Entries
S/N Description Cr. Dr.
1. Consignment to Mama A/C ………………………………..... 100,000  
Goods Sent on Consignment….……………..… 100,000
(Sent goods on consignment to Mama Traders)

2. Consignment to Mama A/C .…………………………….…... 500  


Cash ……………………………………..…… 500
(Expenses incurred on the Consignment)

3. Bill receivable A/C …………………………………...……… 50,000  


Mama traders A/C ……………………………. 50,000
(Advance received from the Agent in the form of Bill)
4. Consignment to Mama A/C ………………………………..... 3,500  
Mama traders A/C ……………………………. 3,500
(Paid carriage and sales expenses by consignee)

5. Cash ……………………………………………………..…… 50,000  


Bill receivable A/C …………………………… 50,000
(The bill met on due date)

6. Mama traders A/C ……………………………………………. 75,000  


Consignment to Mama A/C ………….……..... 75,000
(Gross sale proceeds as per Account Sales)

7. Consignment to Mama A/C ………………………………..... 7,500  


Mama traders A/C ……………………………. 7,500
(Commission on gross sales payable @ 10%)
  Stock on Consignment A/C ………………………………… 40,800  
Consignment to Mama A/C ………………….. 40,800
(The amount of unsold goods in stock)
8. Consignment to Mama A/C ………………………………….. 4,300  
Profit and Loss A/c …………………………... 4,300
(Transferred profit on consignment to profit and loss A/c)
9. Cash ……………………………………………………..…… 14,000  
Mama traders A/C ……………………………. 14,000
(Amount received in draft along with account sales)
10. Goods sent on Consignment A/c …………………………….. 60,000  
Trading A/c ………………………………….. 60,000
(Goods sent on consignment A/c closed by transfer to trading
A/c)
Ledgers
Consignment to Mama Account
  Dr.   Cr.
Goods sent on Consignment A/c …… 100,000 Mama Traders A/c ……………… 75,000
Expenses on consignment …………... 500 (Sale proceeds)  
Mama Traders A/c:   Goods sent on Consignment  
Carriage ………………….…… 1,500   A/c ... 40,800
Sales expenses …………….…. 2,000 3,500
Mama Traders: Commission ……….. 7,500
P & L A/c (Transfer) ………….…,.… 4,300

115,800 115,800
Mama Traders Account
  Dr.   Cr.

Consignment to Mama A/c ………… 75,000 Bill Receivable A/c ………… 50,000
    Consignment to Mama A/c … 3,500
Consignment to Mama A/c … 7,500
Cash ………..………………. 14,000

75,000 75,000
• Goods sent on Consignment Account
  Dr.   Cr.

Trading A/c (Transfer) ……………… 60,000 Consignment to Mama A/c … 100,000


Journal Entries and Ledger Accounts on the Books of Mama Traders
(Consignee)
Journal Entries
S/N Description Cr. Dr.
1. ABC Co. A/C .………………………………….……….…... 3,500  
Cash ……………………………………..…… 3,500
(Paid expenses on the Consignment received)

2. ABC Co. A/C ………………………………………...……… 50,000  


Bills payable A/C ………….…………………. 50,000
(Acceptance of bill drawn against the consignment)

3. Bills payable A/C ………………………………………..…… 50,000  


Cash ………………...………………………… 50,000
(The bill met on due date)
4. Cash …………………………………………………….……. 75,000  
ABC Co. A/C ………….……………….…..... 75,000
(Sales effected for the Consignment received)

5. ABC Co. A/C ……………………………..………………..... 7,500  


Commission revenue …………………………. 7,500
(Commission receivable on the goods sold)

6. ABC Co. A/C ……….…………………………………..…… 14,000  


Cash ……………………………………..……. 14,000
(Amount remitted as final settlement)
• Ledgers
• ABC Company A/c
  Dr.   Cr.
Cash (Expenses) …………………….. 3,500 Cash A/c (Sale proceeds) 75,000
Bills payable A/c ……………………. 50,000  
Commission A/c …………………….. 7,500
Cash (amount remitted) ……….....….. 14,000

75,000 75,000
Bills payable A/c
  Dr.   Cr.

Cash ……………………………… 50,000 ABC Co. A/c …………… 50,000


•Account sales of 50 TV Sets received and sold on behalf of ABC Company

Particulars Amount
Sale Proceeds:  
30 TV Sets sold at $2,500 each ……………………… $75,000
Less: Expense:  
Carriage ………………………..……... $1,500  
Sales expenses …………………...……. 2,000  
Commission @ 10% …………………... 7,500 11,000
Net proceeds …………………………………………. 64,000
Less: Advance (Bill) …………………………………. 50,000
Balance sent by Draft ………………………………… 14,000
The End!
Thank You!!

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