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CS148

The document discusses two examples of consignment agreements. The first example provides details of an agreement between MMM Corp and OOO Company for water heaters. The second example gives details of an agreement between ELM Co and a furniture dealer for sala sets. Key details from the account sales and calculations related to units sold, amounts remitted, inventory balances and journal entries are presented.

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44 views1 page

CS148

The document discusses two examples of consignment agreements. The first example provides details of an agreement between MMM Corp and OOO Company for water heaters. The second example gives details of an agreement between ELM Co and a furniture dealer for sala sets. Key details from the account sales and calculations related to units sold, amounts remitted, inventory balances and journal entries are presented.

Uploaded by

krips
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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1. The MMM Corp. delivered 150 bath water heaters to OOO Company on consignment.

These water
heaters cost P900 each and are advertised to sell at P1,500 each. The consignee is to be allowed a
commission of 15% of the selling price. The agreement for the consignment stated that MMM Corp.
would draw a sight draft on the consignee for the 60% of the cost of the water heaters and advance
shall be recovered periodically by monthly deductions (in proportions to units sold) from the remittances
which accompany the account sales. All expenses of the consignee are to be deducted monthly as
incurred.

The consignee rendered an account sales at the end of the first month showing among others the
following information: advertising, P2,250; delivery expense, P1,125; and commission, P3,375.

● The consignment profit (loss) of MMM Corp. is _______.


2250

● The number of units sold by OOO Company during the first month is _______.
15

● The amount remitted by OOO Company to MMM Corp. for the first month is _______.
7650

2. The ELM Co. consigned ten sala sets to a furniture dealer. Manufacturing cost is P4,000 per set. At the
end of one month, the dealer reported the sale of four sets at P7,000 each and remitted the net sales
proceeds after deducting the following: 20% commission on sets sold and P1,600 freight paid upon
receipt of the ten sets.

● The balance of the consignor’s inventory relative to the consigned goods is _______.
24960

● Cash remitted to the consignor was _______.


20800

● Net profit on consignment sales was _______.


5760

● The entry on the books of ELM to record the shipment assuming consignment profits are
calculated separately includes
A credit to merchandise shipment on consignment of 40,000

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