CONSIGNMENT

CONSIGNOR TO CONSIGNEE
CONSIGNMENT MEANING

• IT IS A COMMON PRACTICE AMONG WHOLEALE MERCHANTS AND THE

MANUFACTURERS TO DISPATCH OR SEND GOODS TO THEIR AGENTS FOR
SALE, SUCH DISPATCH OR SENDING OF GOODS BY MANUFACTURER TO HIS
AGENT FOR SALE ON HIS BEHALF AND AT HIS RISK IN RETURN FOR
COMMISSION IS KNOWN AS CONSIGNMENT.
PARTIES IN CONSIGNMENT

• A MANUFACTURER WHO SEND THE GOODS ON CONSIGMENT IS CALLED

CONSIGNOR
• THE AGENT TO WHOM THE GOODS ARE CONSIGNED FOR SALE IS CALLED
CONSIGNEE.
• THE GOODS CONSIGNED ARE CALLED GOODS SENT ON CONSIGNMENT OR
GOODS ON CONSIGNMENT
ACCOUNT SALE

• ON THE COMPLETION OF SALE OR ANY PARTICULAR INTERVALS CONSIGNEE SENDS TO THE

CONSIGNOR AN ACCOUNT, WITH THE GOODS SOLD BY HIM IN THE FORM OF
CONSIGNMENT, SUCH STATEMENT IS CALLED ACCOUNT SALE.
• FEATURES:
• IT GIVES THE PAARTICULARS OF GROSS SALES
• EXPENSES INCURRED BY CONSIGNEE
• COMMISSION DUE TO CONSIGNEE
• ADVANCE PAID BY CONSIGNEE TO CONSIGNOR
• FINAL BALANCE DUE FROM CONSIGNOR TO CONSIGNEE.
FORMAT OF ACCOUNT SALE:

• GROSS SALE OF ABC LTD =RS 110000, EXP INCURED BY CONSIGNEE=RS

10000
• COMMISSION=10% & ADVANCE PAID RS 3000.
GROSS SALE 110000
LESS: CONSIGNEE EXP 10000
LESS: COMMISSION 110000X10% 11000
LESS: ADVANCE PAID 3000
BALANCE DUE FROM CONSIGNEE 59000
TO
CONSIGNOR
TYPES OF CONSIGNMENT EXPENSES

• (1) Non-recurring Expenses

• The expenses incurred between the period of goods sent by the consignor to
receive by the consignee are known as non-recurring expenses. In other words,
all expenses incurred until the goods reach the consignee are non-recurring
expenses. Examples of non-recurring expenses are as follows:
Expenses of the consignor Expenses of the consignee

Packing Unloading charge

Carriage Dock dues
Docks dues Import duty
Landing Charge
Freight
Insurance
(2) RECURRING EXPENSES

• The expenses paid by the consignee after receiving the consigned goods are
known as recurring expenses. These expenses are of recurring nature and do not
increase the value of goods.
Expenses of the consignor Expenses of the consignee

Bank charges Storage charge

Expenses incurred on damaged Insurance
Goods received back Brokerage
Advertising
Salary to salesmen
Expenses on goods return
Goods damaged
Commission on sales.
TYPES OF LOSSES

• Normal loss occurs majorly due to natural causes like drying, evaporation, leakage,
shrinkage or perishing a few items due to handling goods in bulk quantities.
• Normal losses are mostly related to the nature or type of the goods being handled or
moved from one place to another.
ABNORMAL LOSS

• The abnormal loss is avoidable in nature and generally arises due to reasons like fire,
theft, accident or flood etc.
• The consignment account, in fact, is given a credit for the value of abnormally lost units
so that true profit or loss of consignment can be computed.
UNSOLD STOCK / CONSIGNMENT STOCK

• IF THE CONSIGNEE HAS NOT BEEN ABLE TO SELL ALL THE GOODS SENT TO
HIM BY THE CONSIGNOR AT THE CLOSING DATE OF CONSIGNORS ACCOUN
TING PERIOD , THE GOOD THAT REMAIN UNSOLD WITH THE CONSIGNEE IS
CALLED CONSIGNMENT STOCK.
CAALCULATION OF CONSIGNMENT STOCK

COST PRICE OF CONSIGNMENT STOCK XXX

ADD: NON RECURRING EXP BY CONSIGNOR XXX

ADD:NON RECURRING EXP BY CONSIGNEE XXX

VALUE OF UNSOLD/CONSIGNMENT STOCK XXX

• SURESH AND COMPANY CONSIGNS 100 TV SETS TO MR SINGH, EACH TV SET
COST RS 800. THE FOLLOWING EXP RELATED TO SURESH & CO
• INSURANCE RS400, CARRIAGE RS 500, FRIEGHT RS 1000
• MR SINGH INCURRED THESE EXP , CUSTOM DUTY RS 6000, DOCK DUES RS
500, GODOWN RENT RS 500, SALARY TO SALESMAN RS 300. AT THE END OF
THE YEAR 25 TV SETS REMAIN UNSOLD. CALCULATE THE VALUE OF
UNSOLD STOCK.
• 100 TONS OF COAL COSTING RS 10/ TON CONSIGNED BY THE ABC LTD.
• CONSIGNOR INCURRING EXP OF RS 2/ TON, 20TONS LOST DUE TO LEAKAGE
AND 40 TONS REMAIN UNSOLD. CALCULATE THE VALUE OF UNSOLD
STOCK.