Unit – 1 – Consignment

PART – A 12x2
1. What is mean by ‘Consignment’?
2. List the features of consignment.
3. Define ‘Proforma Invoice’.
4. What is an ‘Account Sale’?
5. What is ‘Del Credere Commission’?
6.What is the purpose of Del credere commission?
7. Define over riding commission.
8. Define Consignee & Consignor.
9.What is mean by stock on consignment?
10.What is Normal loss?
11. Define abnormal loss.
12.Define consignment stock reserve.
PART – B 10x4
1. Sekar of Salem sends goods amounting to Rs.25,000 to Mathu of Madurai on Consignment
basis. He pays Rs.1,000 as forwarding expenses. The goods are received by Mathu who
spends Rs.500 for carriage.
Mathu sells the goods for Rs.32,000 for which he incurs selling expenses of Rs.1,500. He is
entitled to a commission of 10% on the gross sale proceeds. Mathu settles the account by a
bill. Prepare the Account of sales.
2. Ram of Chennai sends goods amounting to Rs.35,000 to Mani of Madurai on Consignment
basis. He pays Rs.1,000 as forwarding expenses. The goods are received by Mani who spends
Rs.1000 for carriage.
Mani sells the goods for Rs.42,000 for which he incurs selling expenses of Rs.1,800. He is
entitled to a commission of 10% on the gross sale proceeds. Mani settles the account by a
bill. Prepare the Account of sales.
3. On 20th Nov.2002 Muthu & Co., of Chennai consigned 500 Radios to Kamal & Co.,
Madurai. On 31st Dec.2002 Kamal & Co., forward an Account sales, with a bank draft for the
balance, showing the following transactions:
(i) 400 Radios sold @ Rs.750 and 100 Radios @ Rs.800 each.
(ii) Unloading charges Rs.1,000
(iii) Storage & Insurance Rs.2,000
(iv) Commission on sales @10%
You are required to prepare an Account sales.
4. Define Consignment and state its features.
5. Show how the following transactions would appear in the Journal of consignor:
a) Mr. Mathi of Madurai consigned 200 boxes of material of ₹2000 each to Mr. Sridhar of
Salem.
b) Mr. Mathi incurred freight charges of ₹15000.
c)Mr. Sridhar incurred loading and clearing charges for ₹7,000
d)Mr. Sridhar sold entire goods for ₹4,60,000.
6. Mr. Yasin of Pune consigned goods of 3000 units @ ₹100 per unit, at invoice price to Mr.
Zahir of Kochi. Mr. Yasin incurred expenses for ₹12,000 and Mr. Zahir incurred expenses for
₹8,000. Mr. Zahir accepted the bill drawn on him by Mr. Yasin for ₹40,000. Write the journal
entries in the books of Mr. Yasin.
7. Prem consigned 200 boxes of medicines of ₹100 per box to Ram. Prem incurred the following
expenses: Insurance ₹1000, Loading charges ₹1600 and Freight ₹1400. Ram also incurred the
following expenses: Godown rent ₹1000, Advertisement ₹600 and Other selling expenses ₹1000.
Ram sold 160 boxes at ₹200 per box. Calculate the value of stock on consignment.

8.Pravin consigned 200 boxes of medicines of ₹100 per box to Ravi. Pravin incurred the
following expenses: Insurance ₹1000, Loading charges ₹1600 and Freight ₹1400. Ravi also
incurred the following expenses: Godown rent ₹1000, Advertisement ₹600 and Other selling
expenses ₹1000. Ravi sold 160 boxes at ₹200 per box. Calculate the value of stock on
consignment.
9. X sent goods worth ₹1,25,000 to Y on consignment. X incurred expenses of ₹5,000 for
consignment and Y paid ₹3,000 on loading. Y sold entire goods at 20% profit. Y is eligible
for a commission of 10% on sales. Show the journal entries in the books of Consignee.
10.Define Joint Venture and point out its characteristics.
PART – C – 10x6
1. Ram sends goods to Prem on 1.1.2019 on consignment. Prem accepted a (3 months) bill
drawn by Ram for ₹1,00,000. Ram discounted the bill with banker @ 15% discount p.a. on
4.1.2019. Ram incurred expenses of ₹30,000 whereas Prem incurred expenses of ₹20,000
(60% non-recurring). Prem sent the final balance of ₹2,85,000. The gross profit margin is
25% and 10% of goods remain unsold. Prepare Consignment A/c and P A/c in the books of R
along with working notes.
2. K of Kolkata consigned goods to C of Chennai for sale at invoice price or over. C is
entitled to a commission of 10% on invoice prince and 30% on any surplus price realized. C
accepted a bill drawn by K amounting 80% of invoice price. During the year 2018, Goods
consigned by K were invoiced at ₹90,000, which cost ‘K’ ₹60,000. Sales were made by C
were ₹81,000 and goods unsold were ₹21,000 represented invoice value. C remitted a single
draft for the amount due after deducting his commission and advance proportionate to goods
sold. Show the necessary accounts in the books of Consignor.
3.Jain of Delhi consigned 300 tins of coconut oil to Narang of Chandigarh, invoiced at ₹200
per tin. Jain paid ₹2,000 as carriage and other expenses. The consigner drew a bill of
exchange for ₹16,000 which was later discounted at ₹15,700/-. The consignee rendered an
account sales showing the following details:
280 tins sold at ₹250 per tin : 20 tins sold at ₹260 per tin
Storage and selling expenses ₹5,000 : Clearing and cartage ₹1,600 : Commission at 6% on
sales. The consignee sent a sight draft for the balance. Give the journal entries and important
ledger accounts in the books of consignor.

4. Balan of Bangalore consigned 190 bags of Sugar to Raghu of Chennai, invoicing goods at
₹180 per bag, Balan paid ₹1,200 as cartage and other expenses. The consignor drew a bill of
exchange for ₹12,000 which was later discounted at 11,800. The consignee rendered account
sales showing the following details.100 bags were sold at ₹240 each on credit and 90 bags
were sold at ₹230 each for cash. Freight and Carriage ₹2,000. Transit Insurance ₹600Storage
and Insurance ₹1,000Commission at 5%The Consignee sent a sight draft for the amount due.
Prepare ledger accounts in the books of both the parties assuming that the consignee
incurred a bad debt of ₹400.
5. Distinguish between Consignment and Sale.
6. Differentiate between ‘Del credere Commission’ and ‘Over Riding Commission’?
7. Mohan & Co., of Delhi consigned 10,000 kg. of ghee costing Rs.20 per kg to Sohan & Co.,
of Mumbai. Mohan & Co., paid Rs.50,000 as freight and Insurance. 250 kg of ghee were
destroyed in transit. The insurance claim was settled at Rs.5,000 and was paid directly to the
consignors. Sohan & Co., took delivery of the consignment. After three months, Sohan &
Co., reported as follows:
(a) 7,500 kg were sold at Rs.30 per kg.
(b) the other expenses were:
Godown rent – Rs.5,000
Wages – Rs.17,000
Printing & Stationery – Rs.10,000. From the above particulars calculate (i) normal loss and
(ii) Value of unsold Stock.
8. 5,000 kg of ghee were sent at the rate of Rs.2.50 per kg. the consignor paid Rs.2,000 for
freight and insurance. 200 kg of ghee were accidently destroyed during the transit.
The consignee sold 4,000 kg @ 3.25 per kg and his expenses were Rs.450 godown rent and
Rs.5.50 advertisement and selling expenses. Consignee reported a loss of 50 kg due to transit.
From the above particulars calculate (i) Abnormal loss and (ii) Value of Consignment Stock.
9. Sankar sends 20,000 units @ Rs.50 to Sunil on 1.1.99 to be sold at a commission of 7.5%.
5% goods were lost in transit and its consider normal. The consignor spent the following
expenses:
Packing expenses @ Rs.2 per cash(cash)
Freight Rs.10,000 (due)
Insurance Rs.6,000(bank)
The consignee received the balance consignment and sent a cheque of Rs.2,00,000 as
advance. He incurred Rs.8,000 as unloading charges and Rs.36,000 as selling and distribution
expenses. He submitted an account sales on 31.3.99 disclosing that 14,000 units were sold @
Rs.80 per unit. Assuming the consignee sent draft for balance you are required to prepare,
the consignment account .
10. How do you value ‘Abnormal Loss of Goods, on Consignment?