QUIZ-CONSIGNMENT PROF ZENAIDA VERACRUZ- MANUEL

A. THEORY. Letter choices on the date column of your worksheet.

1. The consignment in account was credited for P12,000 and the consignment out was
credited for the same amount . This represents revenue earned from consignment. From
whose viewpoint is the second statement correct?
a) From both consignee and consignor c) From consignor only
b) From consignee only. d) some deductions from both should be made first

2. If all consigned goods were sold, a debit balance in the consignment out account
represents
a) consignment loss c) inventoriable cost
b) deferred costs d) advances received
3. If consignor allowed consignee to sell on account, in consignors book this is recorded as
a) due from consignee c) inventoriable cost
b) deferred cost d) due to consignor
4. Consignor paid freight on goods consigned. If goods are unsold, freight should be part of
a) expenses c) inventoriable cost e) both b) and c)
b) balance of consignment out d) balance of consignment in f) b), c and d) are correct
5. Principle of matching is applied to which of the following costs?
a) Installation c) commission e) none of the aforementioned costs
b) delivery d) all
6. Goods on consignment including freight and insurance are inventoriable cost of
a) consignor until it is sold c) both consignee and consignor
b) consignee until it is sold d) neither consignee nor consignor
7. Consignor recognizes revenue when consigned goods are
a) shipped to consignee c) sold by consignor to consignee
b) received by consignee d) included in the account sales
8. The title Merchandise Shipment on Consignment is closed in consignors book at the end
of the accounting period to determine
a) total cost of goods sold c) total cost of goods shipped
b) regular cost of goods sold d) total cost of goods returned
9. If consignee did not make a full remittance, which account will have a debit balance?
a) Consignment In c) Due From Consignee
b) Consignment Out d) Both a) and c)
10. Consigned goods while in the hands of the consignee should be
a) deducted from consignors available for sale c) added to consignors inventory
b) added to consignees inventory d) recorded as Due from Consigne
PROBLEMS (Problems A and D on the left side of the worksheet. Problems B and C on
the right side.
A. (RPCPA EXAM) Aircon Inc. consigned 12 one-horse power air-condition units to Argy
Trading and paid P2,000 freight out. Gross margin is 25% of selling price which was set
for P12,000. The consignee is allowed a commission of 5% on sales but is required to give
an advance payment to be deducted proportionately based on sales made. Argy Trading

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 account sales on December 2015, gave a remittance for 6 units sold after deducting selling
expenses of P800, delivery and installation of P1,200 and the appropriate commission and
advances.
Required: 1. Prepare an account sales.
2. Entries in the books of the consignor. Consignment profit is determined
separately.
3. Reclassifying entry(s) of consignor, if any.
B. Henry Inc. sells piano for Key Inc. on consignment basis. His ledger postings show among
others the following account:
Consignment In - Key Inc.
Freight and Insurance Sales (3) P21,000
(10 pianos) P3, 500 Returns (3)
Delivery 300
Commission 6,300
Freight for 3 pianos returned 1,050

Just before the year ended in 2015, Henry made only an 80% remittance of the total
amount due. Sales price is 100% above cost. Key paid P2,750 shipping cost for the
shipment.
Required:
1) Entries in the book of the consignee to record only a) remittance and b)
reclassification for reporting purposes.
2) All entries in the books of the consignor. Support with a table analyzing for cost of
total shipment, goods sold, goods returned, goods sold.
3) Give the proper presentation of the balances in the balance sheet of
a) consignee and b) consignor.
C. REFER TO PROBLEM B. Two more units were sold on January2016. Related expenses
needed were incurred by Henry and full remittance was made.
Question 1: How much will be remitted?
Question 2: How much is Keys consignment profit or loss?
Question 3: How much is inventoriable cost of Key?
D. Moran Appliances consigned on November 5 five electric fans costing P800 each to Dizon
Marketing Company, which was to sell them at any price above P1,000. The amount over
P1,000 will represent consignee's commission. Moran paid the trucking cost of P200 and
is to reimburse Dizon for local delivery to customers. During December, Dizon Marketing
sold three fans, two for cash at P1,500 each and one on credit at P1,800 of which it had
collected 50%. Dizon paid P170 for local delivery to customers. Full remittance is
required within a month from the time goods are sold.
Question 1: Assuming that Dizon Marketing made interim settlement as of December 15,
how much should it remit to Moran Appliances?
Question 2: How much is the profit to date of Moran Appliances resulting from the
consignment?
Question 3: How much is the profit to date of Dizon?

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QUIZ-CONSIGNMENT PROF ZENAIDA VERACRUZ- MANUEL
SOLUTION

1.C 2. A 3A 4A 5E 6D 7.D 8.B 9C 11. C

Prob A

PROBLEMS
1. Sales (6 x 12,000) 72,000
Less: Selling 800
Installation 1,200
Commission 3,600 5,600
Balance 66,400
Less: Advances 6,000
Due for remittance 60,400
Units on Hand 6

2, Entries (Consignor)
a. Consignment Out Argy 108,000
Merchandise Shipment on consignment 108,000
Consignment Out T. Nippon 2,000
Cash 2,000

Cash 12,000
Advances from Consignee 12,000

Cash 60,400
Advances 6,000
Consignment Out 5,600
Consignment Out T. Nippon 72,000

Consignment Out 11,400

Consignment Profit 11,400

3. Reclassifying entry:
Merchanise Inventory-Consignment 54,000
Deferred Consignment Expenses 1,000
Consignment Out (unsold including freight) 55,000
This should close the consignment out account.

Sales P72,000
Cost of Sales (72,000 x 75%) P54,000
Commission 3,600
Selling Expenses 800
Delivery & Installation 1,200
Freight (2,000 x 6/12) 1,000 60,600
Net Profit P 11,400

Prob B
1. Balance of the consignment in represents amount for remittance P9,850
Remittance 80% of P9850= P7,880
Due to consignor 20%= P1,970

1) Consignment In -Key Inc. 7,880

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 Cash 7,880

2) Consignment In 1,970
Due to Consignor 1,970

b) Entries in the Books of Consignor

Consignment Out Henry Inc. 35,000
Merchandise Shipment on Consignment 35,000
(21,000/3 = 7,000 /200% = 3,500 x 10)

Consignment Out Henry Inc. 2,750

Cash 2,750

Cash 7,880
Consignment Out Henry Inc. 11,150
Due from Consignee 1,970
Consignment Out Henry Inc. 21,000

Merchandise Shipment on Consignment 10,500

Consignment Out 10,500

Consignment Loss 900

Consignment Out 900

Table
Total 4 Unsold 3 Returns 3 Sold
Cost 35,000 14,000 10,500 10,500
Shipping Cost 2,750 1,100 825 825
Freight 3,500 1,400 1,050 1,050
Delivery 300 300
Commission 6,300 6,300
Freight 1,050 1,050
48,900 16,500 13,425 18,975

Sales P21,000
Less charges for goods sold P18,975
Expenses for goods returned 2,925 21,900
Consignment Loss P 900

Reclassifying entry:
Reclassifying entry:
Merchanise Inventory-Consignment 14,000
Deferred Consignment Expenses 2,500
Consignment Out (unsold including freight) 16,500

3) Consignees Balance Sheet Current Liability-Due to Consignor P 1,970

Consignors Balance Sheet Current Assets: Due from Consignee P 1,970

Merchandise Inventory-Consignment 14,000
Deferred Consignment Expenses 2,500

C. 1) Sales (2x 7,000) 14,000

Less: Delivery Expenses to be reimbursed (200)
Commission (4,200)

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 Balance to be remitted from addtl sales 9,600
Due to Consignor previous swales 1,970
Total P11,570

2) Sales 14,000
Less: COS (2 x 3,500) 7,000
Shipping Cost 550
Commission 4,200
Freight 700
Delivery Expense 200 12,650
Profit of Moran Appliance P 1,350

3) Inventory- Consignment P7,000

Deferred Consignment Expenses 1,250
Consignment Out debit balance P8,250

D.
a) For remittance (3 x 1,000) 3,000
Less: Delivery Expenses 170
Balance to be remitted 2,830

b) Sales 3,000
Less: COS (3 x 800) 2,400
Trucking Cost (3/5 x 200) 120
Delivery Expense 170 2,690
Profit of Moran Appliance P 310

c) Sales (1,500 x 2 = 3,000 + 1,800) 4,800

Less: Contract Price (3 x 1,000) 3,000
Profit of Dizon representing commission 1,800

Exercise 4
4. a. Sales (80 x 25,000) * 2,050,000
Less: Commission 307,500
Advertising 3,500
Del. & Inst. 750
Cartage 1,500
Freight 1,250 314,500
Balance 1,735,500
Less check endorsed 1,642,500
Balance still due P 93,000
Returns 5 sets

* Balance still due 93,000

Remittance 1,642,500
Total 1,735,500
Less charges except commission 7,000
Net after 15% commission 1,742,500
Divide by 85%
Total Sales P2,050,000 /25,000 = 82, units sold

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 b. Consignment in White Power House
Commission 307,500 Consignment Sales 2,050,000
Advertising 3,500
Del. & Inst. 750
Cartage 1,500
Freight 1,250
Remittance 1,642,500

Consignment Out Eternal Power Block

Merchandise shipped 1,800,000 2,050,000 Consignment Sales
Freight 1,500 60,000 Ret. Merchandise
Commission 300,000
Advertising 3,500
Del. & Inst. 750
Cartage 500
Freight 250
Profit 748,940

c) Analysis of Cost and Expenses

(150) (5) (63) (82)
Total Sets Ret. Sets Unsold Sets Sold
Charges of Consignor
Cost of Merchandise 1,800,000 60,000.00 756,000 984,000
Freight 5,500 183.33 2,310 3,006.67
Charges of Consignee
Freight On Return 1,250 1,250.00
Del. & Inst. 750 750.00
Cartage 1,500 50.00 630.00 820.00
Commission 307,500 307,500
Advertising 3,500 ________ _________ 3,500.00
Total 2,120,000 61,483.33 758,940.00 1,299,576.67

d) Sales 2,050,000.00
Less: Charges rel.ated to sets sold 1,299,576.67
Expenses related to return 1,483.33 1,301,060.00
Consignment Profit 748,940.00

c) Entries on books of consignee

Received 150 generators from White Power House to be sold at P25,000 each for 15%
commission, expenses reimbursable.

Consignment In White Power House 5,750

Cash 5,750

Consignment Receivable 1,025,000

Cash 1,025,000
Consignment In White Power House 2,050,000

Cash 932,000
Consignment Receivable 932,000

Returned 5 Generators to White Power House

Consignment In White Power House 1,250
Cash 1,250

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Consignment In White Power House 1,642,500
Cash 1,642,500

Books of Consignor
Consignment Out Eternal Power Block 1,800,000
Merchandise shipment on consignment 1,800,000

Consignment Out Eternal Power Block 5,500

Cash 5,500

Cash 1,642,500
Due from Consignee 93,000
Consignment Out Eternal 314,500
Consignment Out Eternal 2,050,000

Merchandise Shipment on Consignment 60,000

Consignment Out Eternal 60,000

Consignment Out 748,940

Consignment Profit or Loss 748,940

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