GONZALES, Caira Lois D.

CONSIGNMENT SALES

1. On March 1, 2015, Hi-Tech Company consigned 5 computer sets to Electron

Appliance Center and paid P3,500 transportation cost. A set costs P17,500 and is to
be sold at 200% of cost. On April 30, Cely reported that all sets were sold for cash
and made the necessary remittance after deducting 15% commission, P1,500
cartage-in and P500 delivery and installation cost per set
REQUIREMENTS
● Consignee’s perspective
a. Prepare an account sales
ELECTRON APPLIANCES CENTER
Account Sales

For the Account and risk of No. XXX

Hi-Tech Company Date: January 31, 2025

Sales ((200% x 17,500) x 5) P175,000

Less Charges:
Cartage P1,500
Commission 26,250
Delivery and installation 2,500 30,250
For Remittance P144,750
On Hand 0

b. Show posting to the Consignment In Account, properly labeled

CONSIGNMENT IN – HI-TECH COMPANY
Cartage P1,500 Sales P175,000
Commission 26,250
Delivery and installation 2,500
Remittance 144,750

c. Make entries in the books of the consignee

Mar 1 Received 5 computer sets to be sold for 15%
commission

April 30 Cash
Consignment In – Hi-Tech Company P175,000
To record sales of computer sets P175,000

Consignment-In – Hi Tech Company 1,500

Cash 1,500
Paid for cartage
 Consignment In – Hi-Tech Company 26,250
Commission Income 26,250
To record commission on sales

Consignment In-Hi-Tech Company 2,500

Cash 2,500
To record delivery and installation of
computer sets
(5x500)

Consignment In – Hi-Tech Company 144,750

Cash 144,750
To record full remittance

● Consignor’s perspective
d. Show the posting to the Consignment Out Account, properly labeled
CONSIGNMENT OUT – ELECTRON APPLIANCE CENTER
Cost of consigned goods P87,500 Sales P175,000
Shipping cost 3,500
Consignee expenses 30,250
Profit P53,750

e. Entries in the books of the consignor

Mar 1 Consignment Out – Electron Appliance Center P87,50
0
Merchandise Shipment on P87,500
Consignment
Consigned 5 computer sets to Electron
Appliance Center
(17,500 x 5)

Consignment Out – Electron Appliance Center 3,500

Cash 3,500
To record transportation cost

April 30 Cash 144,750

Consignment Out – Electron Appliance Center 30,250
Consignment Out – Electron Appliance 175,000
To record remittance, consignment
expenses, and account sales

Consignment Out – Electron Appliance Center 53,750

 Consignment Profit or Loss 53,750
To record consignment Profit

● Do you really need to compute for consignor’s profit or loss? What account
would readily give this info out? Explain.
We need to compute for consignor’s profit or loss to account how much sales
was made on the goods consigned. To determine consignor’s profit or loss, the
account use is Consignment Out account which it summarizes the consignment
transactions in the books of the consignor which includes the sales, returns, and
expenses made by the consignee hence this type of account is a nominal
account and the balance it provides represents either the profit or loss.

2. Sounds Of Music Company consigned 10 electric guitars to Benny’s Music Store.

The unit cost is P6,000 and is marked to sell at P10,000 each. Sound of Music paid
shipping expenses of P4,250. At the end of the month, the consignee reported that 8
sets were sold for cash and remitted the net proceeds after deducting a 15%
commission, advertising expense of P1,500 and freight for goods sold of P750.
REQUIREMENTS
● Consignee’s Perspective
a. Account Sales
BENNY’S MUSIC STORE
Account Sales

For the Account and risk of: No. XXX

Sounds of Music Date: January 31, 2025

Sales (8 x 10,000) P80,000

Less Charges:
Commission P12,000
Delivery 750
Advertising 1,500 14,250
For Remittance P65,750
On Hand 2

b. Consignment In account postings properly labeled

CONISGNMENT IN – SOUNDS OF MUSIC
Advertising P1,500 Sales P80,000
Freight 750
Commission 12,000
Remittance 65,750
c. Entries in the books of the consignee
Received 10 electric guitars to be sold for 15% commission

Consignment In – Sounds of Music P1,500

Cash P1,500
To record advertising expense

Cash 80,000
Consignment In – Sounds of Music 80,000
To record sales on 8 electric guitars
(8 x 10,000)

Consignment In – Sounds of Music 750

Cash 750
To record delivery of goods sold

Consignment In – Sounds of Music 12,000

Commission Income 12,000
To record commission on sales
(80,000x15%)

Consignment In – Sounds of Music 65,750

Cash 65,750
To record full remittance

● Consignor’s Perspective
d. Consignment Out posting, properly labeled
CONSIGNMENT OUT – BENNY’S MUSIC STORE
Merchandise Inventory P60,000 Sales P80,000
Shipping of goods 4,250

e. Inventoriable cost of merchandise with consignee? P12,850

f. Consignment profit or loss
Equipment Equipment
Unsold Sold
2 8
Charges of Consignor: Total
Cost of Merchandise P60,000 P12,000 P48,000
(60,000 x 2/10) (60,000x
8/10)

Freight 4,250 850 3,400

(4,250 x 2/10) (4,250 x 8/10)
Charges of Consignee:
Freight-In P750 P750

Advertising 1,500 1,500

Commission 12,000 12,000

Total P78,500 P12,850 P65,650

Sales P80,000
Less: Related charges to good sold 65,650
Consignment Profit P14,350

g. Entries in the books of consignor assuming perpetual method is used

Consignment Out – Benny’s Music Store P60,000
Merchandise Inventory P60,000
To record shipment of goods
(6,000 x 10)

Consignment Out – Benny’s Music Store 4,250

Cash 4,250
Shipping cost of goods consigned

Cash 65,750
Consignment Out – Benny’s Music Store 14,250
Consignment Out – Benny’s Music Store 80,000
 To record remittance and account sales

Consignment Out – Benny’s Music Store 14,350

Consignment Profit or Loss 14,350
To record consignment profit

3. The Consignment Out Account of Puma Sports Store is shown below

Consignment Out – American Sports Center
Merchandise Equipment P25,000 Net Sales (30 units) P30,000
(50 units)
Shipping Cost P2,750 Returned (5 units) ????

Charges to American:
Freight – in 1,500
Advertising 2,000
Freight on goods returned 500

REQUIREMENTS
a. Compute for the consignor’s profit or loss
Compute for Gross Sales: 30,000/80% = 37,500
Commission: 37,500 – 30,000 = 7,500
Sales Price per unit: 37,500/30 = 1,250
Cost per unit: 25,000/50 = 500
Return Equipment: 500 x 5 = 2,500

Equipment Equipment Equipment

Returned Unsold Sold
5 15 30
Charges of Consignor Total
Cost of Merchandise P25,000 P2,500 P7,500 P15,000
(25,000 x (25,000x15/ (25,000 x
5/50) 50) 30/50)

Freight 2,750 275 1,650

(2,750 x 825 (2,750 x
5/50) (2,750 x 30/50)
15/50)
Charges of Consignee:
Freight-In 1,500 150 450 900
(1,500x (1,500x (1,500x
5/50) 15/50) 30/50)

Advertising 2,000 2,000

Freight on goods
 returned 500 500

Commission 7,500 7,500

Total P39,250 P3,425 P8,775 P27,050

Sales P37,500
Charges:
Related to sold units P27,050
Related to return units 925 27,975
(150+275+500)
Consignment Profit P9,525

b. How much is inventoriable costs? P8,775

c. Prepare an account sales assuming consignee paid only 80%

AMERICAN SPORTS CENTER
Account Sales

For the Account and risk of No. XXX

Puma Sports Store Date: January 31, 2025

Sales (30 x 1,250) P37,500

Less Charges:
Freight for goods returned P500
Commission 7,500
Freight In 1,500
Advertising 2,000 11,500
For Remittance P26,000
Check Enclosed (26,000x 80%) 20,800
Balance still due P5,200
On Hand 15
Returns 5

d. Reconstruct the entry of Puma upon receipt of account sales and remittance
Cash P20,800
Consignment Out – Puma Sports Store 11,500
Due from Consignee 5,200
Consignment Out – Puma Sports Store P37,500
To record the receipt of cash, consignment
expense, and account sales
4. Television Inc. shipped 200 TV sets to FM Inc. a retail distributor for sale at a price
of P7,500 on a 15% commission basis. The cost is P4,500 to Television Inc. with
additional payment of P500 per unit to crate and ship to FM Inc. A sight draft was
issued and accepted requiring consignee to advance 60% of the cost of the TV sets
received to be recovered periodically, based on units sold, from remittance to be
submitted by FM Inc. All expenses are reimbursable.

60 units were sold by FM Inc. who paid for delivery and installation of P200 per set.
Five defective sets were returned and FM Inc. paid freight charges of P1,350. The
advance for these were also reported in the account sales prepared at the end of the
month
REQUIREMENTS
 Account sales
FM INC.
Account Sales

For the Account and risk of No. XXX

Television Inc. Date: January 31, 2025

Sales (60 x 7,500) P450,000

Less Charges:
Freight for goods returned P1,350
Commission 67,500
Delivery and installation charges 12,000 80,850
For Remittance P369,150
Less: Advances (60 x 4,500 x 60%) 162,000
Balance P207,150
On Hand 135
Returns 5
 Analysis of charges
Sets Sets Sets
returned Unsold Sold
5 135 60
Charges to Consignor: Total
Cost of Merchandise P900,000 P22,500 P607,500 P270,000
(900,000 x (900,000 x (900,000
5/200) 135/200) x 60/200)

Freight 100,000 2,500 67,500 30,000

(100,000 x (100,000 x (100,000
5/200) 135/200) x 60/200)
Charges to Consignee:
Freight on Returns 1,350 1,350
Commission 67,500 67,500
Delivery and Installation 12,000 12,000
Total P108,850 P26,350 P675,000 P379,500

Sales P450,000
Charges:
Related to sets sold P379,500
Related to returns 3,850 383,350
(2,500 +1,350)
Consignment Profit P66,650

 Entries in the books of consignee and consignor

Books of Consignee
a. Received 200 TV sets to be sold for 15% commission

b. Advances to Consignor P540,000

Cash P540,000
To record advances (200 x 4,500 x 60%)

c. Cash 450,000
Consignment In – Television Inc. 450,000
To record sales of TV sets (7,500 x 60)

d. Consignment In – Television Inc. 67,500

Commission Income 67,500
To record commission on sales (450,000x15%)
e. Consignment-In- Television Inc. 12,000
Cash 12,000
To pay delivery and installation charges
(60x200)

f. Returned five defective TV sets

g. Consignment-In- Television Inc. 1,350

Cash 1,350
To pay freight on returns

h. Consignment-In- Television Inc. 369,150

Advances to Consignor 162,000
Cash 207,150
To record remittance

Books of Consignor
a. Consignment Out – FM Inc. P900,000
Merchandise Shipment on Consignment P900,000
To record consigned goods to FM Inc.
(4,500x200)

b. Consignment Out – FM Inc. 100,000

Cash 100,000
Shipping cost of goods consigned (500x200)

c. Cash 540,000
Advances from Consignee 540,000
To receive cash advances from consignee

d. Cash 207,150
Consignment Out – FM Inc. 80,850
Advances from Consignee 162,000
Consignment Out – FM Inc. 450,000
To record remittances, advances, and expenses

e. Merchandise Shipment on Consignment 22,500

Consignment Out – FM Inc. 22,500
To record the return of 5 defective TV sets

f. Consignment Out 66,650

Consignment Profit 66,650
To record profit and loss on consignment
 g. Merchandise Inventory 607,500
Deferred Consignment Expenses 67,500
Consignment Out – FM Inc. 675,000
Reclassifying Entry
5. The Consignment Out account in the books of Lovely Company is shown below
CONSIGNMENT OUT – NIPPON, INC.
Dec.15 10 radio sets P15,000 Dec 30 4 sets were sold
Cartage
1,200
Charges by consignee:
30 Freight on receipt of
Consignment 800
20% commission 3,200
Delivery & installation 400

Consignee gave only a partial remittance since P1,500 was still collectible

REQUIREMENTS
Solution for sales: 3,200/20% = 16,000
a. How much was the cash remittance? P11,600
NIPPON INC.
Account Sales

For the Account and risk of No. XXX

Lovely Company Date: December 30, 2024

Sales (4 x 4,000) P16,000

Less Charges:
Freight on receipt of consignment P800
20% Commission 3,200
Delivery and installation 400 4,400
For Remittance P11,600
Less: Check Enclosed 10,100
Balance still due P1,500
On Hand 6
b. How much was the consignment profit or loss? P5,600
Sets Unsold Sets Sold
6 4
Charges to Consignor: Total
Cost of Merchandise P15,000 P9,000 P6,000
(15,000 x (15,000 x
6/10) 4/10)

Cartage 1,200 720 480

(1,200 x (1,200 x
6/10) 4/10)
Charges to Consignee:
Freight on receipt of consignment
800 480 320
(800x6/10) (800x4/10)

Commission 3,200 3,200

Delivery and Installation 400 400
Total P20,600 P10,200 P10,400

Sales P16,000
Less: Charges related to goods sold 10,400
Consignment Profit P5,600

c. How much was the balance of the Consignment Out account representing
inventoriable cost to be brought forward to the month of January? P10,200

d. Give the entries in the books of both the consignor and consignee
Books of Consignee
Dec 15 Received 10 radio sets for 20% commission

30 Cash P16,000
Consignment-In-Lovely Inc. P16,000
To record sales of 4 radio sets

Consignment-In – Lovely Inc. 800

Cash 800
Paid for freight

Cash 3,200
 Consignment – In – Lovely Inc. 3,200
To record commission on sales

Consignment-In – Lovely Inc. 400

Cash 400
Paid for delivery and installation

Consignment In – Lovely Inc. 10,100

Cash 10,100
To record partial remittance

Consignment In – Lovely Inc. 1,500

Due to Consignor 1,500
Reclassifying entry

Books of Consignor
Dec 15 Consignment Out – Nippon Inc. P15,000
Merchandise Shipment on Consignment P15,000
To record consigned radio sets to
Nippon Inc.

Consignment Out – Nippon Inc. 1,200

Cartage 1,200
To record cartage paid

30 Cash 10,100
Consignment Out – Nippon Inc. 4,400
Due from Consignee 1,500
Consignment Out – Nippon Inc. 16,000
To record the receipt of cash and
account sales

Consignment Out – Nippon Inc. 5,600

Consignment Profit 5,600
To record profit on consignment

Merchandise Inventory 9,000

Deferred Consignment Expenses 1,200
Consignment Out – Nippon Inc, 10,200
Reclassifying entry
6. Using the data from Exercise 6, prepare an account sales if for the month of
January, which is the start of another account period, Nippon was able to sell 2
more sets and returned 1 set for being defective. It paid P200 for delivery and
installation and P350 freight for goods returned. Full remittance was included that
of the old account
a. Account sales and entries in consignee’s books
NIPPON INC.
Account Sales

For the Account and risk of No. XXX

Lovely Company Date: January 31, 2025

Sales (2 x 4,000) P8,000

Less Charges:
Freight on goods returned P350
20% Commission 1,600
Delivery and installation 200 2,150
For Remittance P5,850
Balance still due 1,500
Balance P7,350
Check Enclosed 7,350
Balance still due 0
On Hand 3
Returns 1

Jan 1 Due to Consignor P1,500

Consignment In – Lovely Inc. P1,500
To reverse entry

31 Consignment In – Lovely Inc. 200

Cash 200
To pay delivery expenses

Cash 8,000
Consignment In – Lovely Inc 8,000
To record the sale of 2 radio sets

Return of 1 defective radio set

 Consignment In – Lovely Inc. 350
Cash 350
To record freight of returned goods

Consignment In – Lovely Inc 1,600

Commission Income 1,600
To record commission on sales

Consignment In – Lovely Inc. 7,350

Cash 7,350
To record full remittance

b. Prepare a table for analysis of charges and compute for the consignment
profit
Sets returned Sets Unsold Sets Sold
1 3 2
Charges to Consignor: Total
Cost of Merchandise P9,000 P1,500 P4,500 P3,000
(9,000 x 1/6) (9,000 x (9,000 x
3/6) 2/6)

Cartage 720 120 360 240

(720 x 1/6) (720 x 3/6) (720x2/6)
Charges to Consignee:
Freight on Returns 350 350
Freight receipt on
consignment 480 80 240 160
(480x1/6) (480 x 3/6) (480x2/6)

Commission 1,600 1,600

Delivery and Installation 200 200
Total P12,350 P2,250 P5,100 P5,000

Sales P8,000
Charges:
Related to sets sold P5,000
Related to returns 750 5,750
(120+350+200)
Consignment Profit P2,250
c. Make entries in consignor’s books
Jan 1 Consignment Out-Nippon Inc. P10,200
Merchandise Inventory P9,000
Deferred Consignment Expenses 1,200
To reverse entry

Jan 31 Cash 7,350

Consignment Out – Nippon Inc. 2,150
Consignment Out – Nippon Inc. 8,000
Due from Consignee 1,500
To record sales, due from consignee,
and expenses

Consignment Out – Nippon Inc. 2,250

Consignment Profit 2,250
To record profit on consignment

Merchandise Inventory 4,500

Deferred Consignment Expenses 600
Consignment Out – Nippon Inc. 5,100
Reclassifying Entry