Consigniment Accounts

2.37
(e) When the goods are consigned to the
included there on should be adjusted consignee at an invoice price, the load/profit
properly in the consignment alc before
closing, by adopting the following procedure:
The profit or load will be found in 4
consignor, ii) lin Goods sent on items viz., i) iii) In opening stock with the
consignment, In goods retuned by
consignee and iv) In closing stock of goods
2 The load included in with the consignor.
opening stock and closing stocks should be
an account called Stoclk transferred to
Reservealc'. The load included in opening
entered on credit side of consignment a/c as Stock Reserve a/c'. And thestock is
included in closing stock is entered on debit side of load
Reserve alc' consignment a/c as Stock
3. Further it may be noted here
that the load should be calculated only on the
invoice price of the goods alone excluding the direct expenses incurred by
both the parties.
4. Similarly the load included in goods sent on
side of consignment a/c as By Goods sent on consignment is entered on credit
included in goods returned by consignee isConsignment a/c and the load
consignment a/c as To Goods sent on Consignmententered
a/c".
on debit side of
5. All the above adjustments can be shown by
called Stock Reserve a/c, which is prepared aspreparing an additional account.
Dr.
under:
Consignment Stock Reserye ac Cr.
Particulars Particulars
To Consignment alc XXX By' Balance b/d XXX
(Load in opening stock transferred (Load in opening stock)
toConsignment alc) By Consignment alc XXX
To Balance cfd
XXX (Load in closing stock transferred
fröm Consignment alc)
XXX XXX

V ustration 24 Pinto Brothers of Poona consigned goods costing 30,000 to their agent
Minto Brothers of Mysore invoiced at 740,000. They paid 2,400for freight and 1,600 for
Insurance. They drew a bill on. Minto Brothers for 8,000 as advance, which was duly
accepted. Minto brothers sent an account sales stating that 3/4" of the goods had been sold for
(40,000 and their expenses were 3,500 towards selling. The consignee is entitled to 5%
commission on sales. They .sent a two months draft for the balance, due in settlement of
account to date.
Prepare consignment account and consignee's alc in the books of consignor.
Solution: Note: Always value the abnornal loss at cost price only.
Rate of load/profits included on invoice price
Profits x 100 (40,000-30,000) x 100 25%
Invoice Price 40,000
It is given that 3/4" consignment is sold. Therefore Closing stock = 1/4th
2.38
Consignment Accounts
Cost of unsold goods at invoice price =
40,000× =
Stock reserve should be calculated on Rs.10,000 only 10,000
excluding direct expenses.
Dr. (BUApril-94)
Particulars
Consignment to Minto Brothers alc Cr.

To Goods Sent On Particulars

Consignment a/c (at IP) 40,000 By Minto Brothers alc
To Bank alc (sales) 40,000
Freight 2,400 By Consignment Stock alc
Insurance (Closing stock) 11,000
1,600 4,000
To Minto BrotherS a/c (40,000 + 4,000)
Selling Exp 44,000 x 1/4
To Minto Brothers alc 3,500| By Goods sent on 10,000
Ordinary Commission Consignment alc
(40,000x5%) 2,000 (Load on goods
To Stock Reserve alc adjusted- 40,000
consigned
×25%)
(Load on closing stock 2,500
10,000 x25%)
To P&L alc
9,000
61,000 61,000
Dr.
Minto Brothers alc Cr.
Particulars
To Consignment alc Particulars
40,000 ByB/R alc (advance) 8,000
By Consignment a/c (expenses 3,500
incurred)
By Consignment alc (commission) 2,009
By Bank alc"
26,500
40,000 40,000
Hustration
Harish of Hubli at5Gulbarga Üniversity-2009) Mohan of
price at 780,000 which is Bombay consigned price. Heto
25% above the cost goods
a proforma invoice
paid 4,000 towards freight and 2,400 towards
insurance and other charges.
Harish took delivery of the goods and paid unloading charges and
other expenses were godown rent 400 and entry tax <800. His
selling expeinses 7800. He sold 3/4h goods for
Z92,000.
He is entitled to an ordinary commission of 5% and a del
sales. He sent a bank draft for the balance toMohan. credere commission of 2% on
Prepare necessary ledger accounts.
Solution:2
Here load is given at 25% (i.., 1/4") on cost price which is equal to 1/5 on sale price.
It is given that 3/4 consignment is sold. Therefore Closing stock = 1/4h
Cost of unsold goods at invoice price = 80,000 x =20,000
Stock reserve should be calculated at i/Sh on 20,000 only excluding direct expenses.
 Consignment Accounts
Dr.
Consignment to Harish alc
ParticulGoods
To ars Sent 80,000
7 Particulars
By Harish Brothers
a/c 92,000
Consignment
ToBank alc a/c (at IP)
On
(sales)
alc 21,800
By Consignment Stock
Freight 4,000 (Closing stock)
ToInsurance
Harish a/c 2,400 6,400 (80,000 + 6,400 + 800)
87,200 x 1/4
Unloading and entry tax Goods sent on 16,000
GodoWn rent 800 By
Consignment a/c
Selling Exp
To Harish
400
800 2,000 (Load on goods -consigned
Ordinary Brothers
a/c adjusted- 80,000 >x 1/5)
Commission 4,600 25
(92,000x5%)
Del-credre
To Stock (92,000 ×2%) L840 6,440
(Load onReserve
a/c
closing stock 4,000
20,000x 1/5)"
To P&L alc
30,960
1,29,800 1,29,800
Dr.
Harish alc
Particulars 7 Particulars
Cr.
To Consignment alc
92,000 By Consignment a/c (expenses 2,000
incurred) 6,440
By Consign:ent alc (commission)
By Bank alc"

92,000 83,560
Dr.
.92,000
Goods sent on.Consignment stock's alc
Particulars |Particulars Cr.
To consignment alc (load) 16,000 By consignment alc
To Trading ac 80,000
64,000
80,000
80,000
Dr. Consignment Stock Reserve alc
Particulars C..
Particulars
To Balance c/d 4,000 By Consignment a/c
(Load in closing stock 4,000
4,000 from Consignment a/c) transferred
4,000
THustration 26 Ravi of Calutta sends 100 sewing machines on
is at consignment
of each machine is 5,200 but the tò Meera of
Patna. The cost invoice price the rate of
Ravi spends 160 for packing and taxes on each machine.
Meera <6,400 each.
andimmediately
accepts Ravi's bill of exchange for received the consignment
32,000. Subsequently, Meera informs
 Consignment Accounts
80machinesbave been sold at 7,000 cach. Expenses paidl by Meera are: Frcipht
rent 2.000. Meera is entitled to a commi_sion of 5% on sales and 2% del

CONInission

consignment alc.and goods sent

on consignmenlac in the consignor boks.
Writeup
(BUApril-91)
Solution:
stock = 100-80 = 20 units
Closing
per unit =6,400- 5,200 =1,200
Load included Meera alc
Consignment to C
Dr. Particulars
Particulars 6,40,000 By Meera alc (sales) 5,60,900
To
Goods sent
(80 units x 7,000)
Consignmenta/c (at IP) By
Consignment Stock 132,000
(6,400 x 100 units) 16,000 a/c
ToBank alc (Closing stock)
Packing exp (6,40,000 +16,000
(160 x100 units) 6,60,000x 20
To Meera a/c 4,000) 100
4,000
Freight 6,000|By Goods sent On
1,20,000
Godown rent 2,000
Consignment a/c
To Meera alc
28,000 (Load on goods consigned
Ordinary Cominission adjusted- 1,200 x100)
(5,60,000 x 5%)
1i.200 39,200
Delcredere commission
(5,60,000 x 2%) 24,000
ToStock Reserve a/c
(Load on closing stock
1,200 x 20 units) 86:800 8,12,000
To P&L alc "
8,12,000 Cr.

a/c
Dr.
Goods sent on Consignment stock's
Particulars
|Particulars 6,40,000

To consignment alc (load) 1,20,000 By Consignment a/c

5,20,000 6,40,000
To Trading alc
6,40,000
of Kolar 200
agent ShivarajBasavarajspet
lastration 27T Basavaraj of Bangalore consigned20% to his cost. the
invoice price of 1,20,000, which was above the invoice priceof
Sarees at an
dispatching the goods. Commission was fixed at 10% on the
74,000 for
realized above the invoice price.4.000as nOn
goods soldand 20% commission on the price spend
sold 150 sarees realizing ?1,25,000 for which he had to
Shivaraj
an advance.
recurring expenses. He sent a bank draft for *1,00,000 as
 2.41
ConsignmentAccounts

inthe books offconsignor:

Preparethe following
(a)Consignmentalc (b)Consignor's a/c
Consignment a/c (d) Consignment Stock reserve alc
(c)Goods sent on
(Gulbarga University -2010)
Solution
S0 units
Closing stock = 200-150 =
Here load is given at 20% (1.e., 1/5")on cost price which is equal to 1/6 on sale price
=600
Invoice price per saree = 1,20,000/200 units
=100
Load per saree E 600x1/6
Or
Consignment to Shivaraj alc Cr.

Particulars 7 Particulars
To
Goods Sent On 1,20,000 By Shivaraj a/c (sales) 1,25,000
Consignment a/c (at IP) By Consignment Stock a/c 31,000
To Bank alc (Closing stock)
Carriage 4,000 (1,20,000 +4,000)
.ToShivaraj alc 1,24,000 x 50
Not- recuring 4,000 200
To Shivaraj alc 20,000
By Goods sent 0n
Ordinary Commission 12,500 Consignment alc
(1,25,000x 10%) (Load on goods consigned
Commission on Surplus 7,000 19,500 adjusted-100 x 200 units)
sales (As per w.n.)
(35,000 x 20%)
To Stock Reserve a/c
(Load on closing stock 5,000
100 x 50units)
To P&L alc " 23,500
1,76,000 1,76,000

Total sale price realized 1,25,000

Less invoice price of goods sold (150 x600) 90,000
Surplus sales over invoice price 35,000
Dr. Shivaraj's alc Cr.

Particulars Particulars
To Consignment alc 1,25,000 By Bank a/c 1,00,000
By Consignment alc (expenses 4,000
incurred)
19,500
By Consignment a/c (commission)
By Balance cld "
1,500
1,25,000
1,25,000
2.42 Consignment Accotnts
Dr. Goods sent on Consignment stock's alc Cr.
Particulars Particulars
Toconsipnnent a/c (load) 20,000 By Consignment a/c 1,20,000
To Trading alc 1,00,000
1,20,000 1,20,000
Dr.
Consignment Stock Reserve alc Cr.
Particulars
To Balance c/d Particulars
5,000|By Consignment a/c 5,000
(Load in
closing stock transferred
5,000 from
Consignment a/c) 5,000
THustration 28 Seema &Co.,
agents Gangothri Stores at Kolkata.consigned 100tins of ghee costing l,600 per
tin to
agents sold 40 tins at 1,800 per tin for tins' were invoiced at proforma 1,800 per tin. their
The
Ihe
over the balancè to their own stock at cash, 40 tins at 1.820 per tin on credit and they took
R4,000 and miscellaneous 1,000. They1,820 per tin. Seema & Co. paid freight and
which was duBy accepted by the latter. drew on Gangothri Stores at 3 months for carriage
Carriage 500, Octroi 400, storage 1,100. The expenses incurred by the 1,00,000
commission and 2% del credere commissionMiscellaneous 1,000. Gangothri
They
Stores were
Account sales to their principal on total gross sale were entitled to 5%
various expenses showing as a-
by them. Amonthdeduction there from their
proceeds. They sent their
incurred
2,000, paid cash and the later all the debtors commission and the
Gangothri
Prepare the necessary accounts inStores remitted the amount due oneXcept one who owed
consignor and theconsignment.
the Books of the
Sotütion a) consignee.
Note: (a) Here load per
(a) Vaiue the goods at unit=1,800 --1,600
(b) Calculate invoice price only, and=200/unit)
not at the cost
Dr. commission on sales including balance stock
price.
To Particulars
Goods sent
Consignment to GangothiStores alc taken over by consignee.
Consignment alc .
1,80,000 By Particulars Cr.
(100 tins
x Gangothri stores alc
To Bank alc 1800) cash sales
Freight &Carriage (40 tins x1,800) 72,000
4,000 Credit sales
Miscellaneous
To Gangothri storesalc 1,000 S,000 (40 tins x1,820) 72,800
Carriage Own purchase
Octrai 500 (20 tins X1,820) 36,400 1,81,200
Storage 400 By Goods sent On
1,100
To Miscellaneous 1000 Consignment a/c
load on goods
Gangothri stores alc 3,000
adjusted) consigned 20,000
Ordinary Commission -9,060
(181200x5%)
Del-credere
100tinsx200/tin
Commission 3.624 12,684
S16
To(181200x2%)
&iL alc 1,01,200
2,01,209
Consignment Accounts
Dr.
Gangothri stores
2.43

Particulars
Particulars
To Consignment a/c
1,81,200 By B/R alc (advance)
1,00,000
By Consignment alc
(expensesincurred) 3,000
By Consignment a/c (commission) 12,684
By Bank a/c 65,5 16
1, 81,200
Dr. 1,81,200
Cr.
Goods sent on Consignment stock's ac
To Particulars Particulars
consignment
To Trading a/c ale(load) 20,000
1,60,000
By consignment alc 1,80,000

1,80,000 180,000

Dr. in the books of Gangothri stores

Seema & Co., alc Cr.
Particulars.
ToB/P ac. Particulars
To Bank alc 1,00,000 By Bank(cash sales) 72,000
(expenses)
To Commission alc 3,000 By Consignment debtors alc 72,800
To Bank alc 12,684 By Purchases a/c 36,400
65,516
1,81,200 1,81,200
Dr.
Commission alc Cr.
Particulars Particulars
To Consignment debtors alc (bad 2,000 By Seema &Co., alc
debts) 12,684
To P&L alc 10,684
12,684
12,684
Dr. Consignment Debtors alc Cr.
Particulars
Particulars
ToSeema & Co., alc 72,800 | By Commission a/c (bad debts 2,000
adjusted)
By Bank a/c
.70,800
72,800
-72,800
Hustration 29 Ajay Toys Ltd. of Chennai dispatched 1,000 toys costing T600 each to
. a & Co., of Kochin. The Ajay loys Lad incurred the following expenses on
consignment: Freight 8,000 and Insurance T2,000. The proforma invoice to the agents was
for Z9,00,000 and the remuneration was fixed at 5% on the gross saße proceeds. Adithya and
company paid 2,00,000 as 'advanc through a bank draft.
In transit, 100 toys wete totally destroyed by fire, and 9,000 were duly received by the
insurer in full settlement of the claim.
consignors from the