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UNIT 3
CONSIGNMENT ACCOUNTS
Introduction
Meaning of Consignment
Consignor
The consignor is the person who sends his goods to the other person to be sold at the
place of the latter. The consignor could be a manufacturer, wholesaler or importer of
goods.
Consignee
The consignee is the person who receives the goods from the consignor and sells them
on behalf of the consignor. He could be an individual or a trader in his area.
Consignment
Features of Consignment
2) The person sending the goods is called the consigner and the person receiving
such goods to be sold is called the consignee. It will be outward consignment for the
consignor and inward consignment for the consignee.
3) The consignee does not purchase the goods from the consignor, he merely
receives them.
4) The consignor does not bear any risk or liability in the goods.
5) The consignee does everything – receiving the goods, selling them etc. on behalf
of and in the capacity of the agent of the consignee. The consignor and the consignee
act as master and agent.
6) All the consignment related expenses are paid and borne by the consignee, even if
the consignee pays any such expenditure, it will be on behalf of the consignor, to be
reimbursed later by the consignor.
7) When the consignor sends the goods to the consignee, it does result in a sale
transaction. A sale transaction takes place only when the goods are sold by the
consignee. The legal ownership or the property or the legal title in the goods remains
with the consignor, till they are sold by the consignee.
8) The consignee is entitled to a certain percentage of commission as agreed by both-
the consignor and consignee, on the sales done by the consignee, and in certain cases,
the consignee is also given a special commission called the ‘del credere commission’.
9) The consignee remits back all the sale proceeds to the consignor, after deducting
the expenses incurred and the commission.
10) The consignee is not liable to pay anything to the consignor on mere receipt of the
goods, but he becomes liable to remit the sale proceeds to the consignor, only after the
sales of the goods. The consignor debits the consignee’s account only when the
consignee sells the goods.
11) The consignee sends a document called the ‘Account Sales’ to the consignor at
regular intervals, to provide information to the consignor, about the sales, stock of
goods etc.
1. Proforma Invoice
PROFORMA INVOICE
Rajesh Electronics
3
To,
Mr. Harish BS,
No. 49, III Cross,
Ashoka Puram,
Chennai.
E and OE
2. Account Sales
1. Goods sold (cash and credit) and total cash received by the consignee.
2. The amount already advanced by the consignee to the consignor.
3. The expenses incurred by the consignee, related to the consignment such
as salesmanship, advertisement etc., to be deducted.
4. The balance due to be paid b y the consignee to the consignor (no.1-2 and
3)
Account Sales of 100 mobile handsets received and sold on account of M/s
Univertell, Chennai.
Bangalore
June 15, 2012
Proprietor
The consignee becomes due to pay the consignor only after the goods are sold (certain
consignees however may pay a certain amount of money as advance, immediately on
receiving the goods. The consignee does this not out of any obligation, but out of good
faith. The consignee will deduct such a sum advanced, from the sale proceeds, before
the final settlement. This advance acts as a security deposit for the goods sent by the
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consignor. The advance sum is given in the form of cash or a cheque or a draft or an
acceptance.
Books of Consignor
The following are the journal entries to be passed in the books of the consignor:
b) If there is a loss
Profit and loss a/c Dr
To Consignment to ---------------- a/c xxxx
xxxx
10. To close the goods sent on consignment a/c
Goods sent on consignment a/c Dr xxxx
To Trading/purchases a/c xxxx
The consignment account (each of which is named after the place to which the goods are
consigned) is designed as a nominal account. The debit side represents the inputs into
the consignment and the credit side represents the output. Therefore a credit balance in
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this account represents profit and debit balance represents loss on account of that
consignment.
1. Ashok of Bangalore consigned 200 dresses costing Rs. 1,200/- each to his consignee
Kishore of Hubli. Ashok paid Rs. 3,500/- as expenses for the consignment. Kishore,
immediately after receiving the goods, sent an advance of Rs. 1,90,000/-.
Kishore, in the due course, sent an account sales stating that all the goods were sold @
Rs.1,800/- each and the total consignment expenses incurred by the him being Rs.
2,500/-. Kishore was entitled to a 10% commission. Kishore had also enclosed a
demand draft for the balance due from him.
The following are the journal entries to be passed in the books of the consignee:
(When the goods arrive at the place of the consignee, the consignee need not pass any
journal entry because, the consignee does not become liable to pay anything until the
goods are sold)
Mahesh sold all the components @ Rs. 160/-each. He was entitled for a selling
commission of 10%. Mahesh settled the balance due to Preetham through a bank draft.
Del-Credere Commission
Generally whenever the consignee comes across bad debts, such a loss is borne by the
consignor. In certain cases however, the consignee pays an additional commission
called the del-credere commission to the consignee, in addition to the selling
commission. When the del-credere commission is paid, the consignee will have to bear
the loss of bad debts. Such a commission also ensures that the consignee sells goods on
credit ,cautiously. When del-credere commission is paid, the consignee is also called the
del-credere agent.
Though the purpose of del-credere commission to make the consignee do credit sales,
cautiously and make him bear the loss of bad debts , it is actually calculated on the total
sales including cash sales, unless otherwise mentioned.
In certain cases the consignee is given a special commission to motivate him to put hard
work especially if the product is new or if the market is very competitive. Such a
commission is called ‘over riding’ commission.
There is no entry in the books of the consignor because bad debts will not affect his
books. The bad debts will be borne by the consignee.
Notes:
1) If del-credere commission is greater than bad debts, such excess will be credited to
profit and loss a/c.
2) If bad debts are greater than del-credere commission, such excess will be debited to
profit and loss a/c
Shravan received the goods and incurred expenses of Rs. 2,000/-. Shravan sent a cheque
for Rs. 10,000/- immediately to Gayan as his advance.
Shravan sold all the goods as follows: Cash sales – Rs. 60,000/- and credit sales Rs.
20,000/-. A debtor worth Rs. 1,000/- did not pay. Shravan was entitled for a 3% selling
commission and 2% del-credere commission.
4. Anil of Bangalore consigned 1,000 saris to his consignee Eshwar of Kolar. The cost
per
sari was Rs. 400/-. Anil paid Rs. 2,000/- towards packing and transportation expenses.
Eshwar received the saris and immediately sent Rs. 25,000/-as advance to Anil. Eshwar
sold all the saris as follows: 500 saris for cash @ Rs.500/- each and 500 saris @Rs.600/- on
credit. He however could not collect Rs. 3,000/- from a debtor. The consignee was
entitled for a 6% selling commission. The consignee’s expenses amounted to Rs. 1,000/-.
Eshwar sent an account sales stating the above and also enclosed an acceptance for the
balance. Anil received the bill and got it immediately discounted at a discount of Rs.
8,000/-.
Kallesh received the consignment and incurred Rs. 500/- as expenses. He immediately
sent Rs. 25,000/- as advance to Chandrasekhar. Kallesh reported that all the carvings
were sold at the price of Rs. 520/- each. The consignee was entitled to a 10% selling
commission. Kallesh sent an account sales detailing the above and also enclosed bank
draft with the same towards the balance.
Prepare the consignment, goods sent on consignment and consignee’s accounts in the
books of Chandrasekhar. Also prepare the account sales.
Solution:
The consignee, on certain occasions may return some goods to the consignor for reasons
such as unsuitability, wrong dispatch of goods etc. These goods become unavailable for
sale at the place of the consignee and therefore must be credited to the consignment
account by passing the following journal entry.
If the consignee incurs any expenses on returning the goods, such expenses must be
recorded through the following journal entry:
If the consignor himself incurs any expenses while receiving such goods, such expenses
must be recorded through the following journal entry:
Closing stock:
At times, when the consignee sends the account sales to the consignor, he might still have
some goods unsold with him. The consignor has to record such closing stock by passing
the following journal entry:
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The consignment stock account is shown in the balance sheet on the assets side.
Such consignment stock has to be shown in the consignment account at the beginning of
the next period, by reversing the above as follows:
Thus, the closing stock of the previous period becomes the opening stock of the current
period.
The goods returned, or consignment stock will not affect the books of the consignee as
would not have become liable for such goods.
Mahendra already had 100 such components as the closing stock of the previous period.
He received the fresh consignment by spending Rs. 1,000/- towards various expenses.
Mahendra was entitled to 5% selling commission and 2% del-credere commission. He,
immediately after receiving the goods sent Rs. 25,000/- as his advance money.
Mahendra sent an account sales stating that he was able to sell 1,050 units @ Rs. 140/-
each. He returned 20 units of goods. He also enclosed a cheque for the balance due to
Narendra. It was the policy of Narendra to value any closing stock on returns at cost
price itself. Mahendra had also spent Rs. 200/- on returning the goods.
Prepare the consignment, consignee’s and the goods sent on consignment accounts in the
books of Narendra.
Valuation of stock
Certain situations require valuation of stock left unsold at the place of consignee, on the
date of final accounts of the consignee, or on the date of preparation of account sales by
the consignee.
The stock so remaining is valued at the lesser of cost price or market price plus a
proportionate share of non-recurring expenses. Non-recurring expenses are those which
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are incurred to lift the goods at the place of consignor and deliver them at the place of the
consignee.
The expenses must be proportionately added to the value of closing stock because,
without incurring those expenses, the goods cannot be physically delivered at the place
of the consignee.
Recurring expenses are those which are incurred after the goods have been delivered at
the place of consignee such as – warehousing, selling, advertising etc.
Das received the sunglasses at Udupi by spending the following: clearing expenses Rs.
600/- and cartage Rs. 400/-. Das immediately sent a cheque for Rs. 1,00,000/- to Harish
as advance.
Prepare the following accounts in the books of the consignor – consignment account,
consignee’s account and goods sent on consignment account and consignor’s account in
the books of the consignee.
Normal loss:
This loss occurs by the way of reduction in the quantity of goods, on account of the
inherent nature of goods. This loss cannot be avoided in spite of the highest amount of
care taken while handling them. This happens because of factors like evaporation,
shrinkage etc.
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In order to absorb the amount of normal loss, the cost of the closing stock is
proportionately increased so as to absorb such loss.
According to this method, the units which reach the place of the consignee bear the value
of normal loss. The normal loss however will not affect the books of the consignee.
8. Mr. Kannan of Bangalore consigned 1,000 kgs of oil to his consignee – Murthy of
Mandya. The cost per kg of oil was Rs. 100/-. Kannan paid the following expenses:
packing Rs. 4,500/-, transportation Rs. 900/-, insurance Rs. 1,800/-.
Murthy received the oil by paying Rs. 5,300/- towards various expenses. He
immediately sent a cheque of Rs. 20,000/- as his advance.Murthy, later sent an account
sales which reported sales of 800 kgs of oil @Rs. 190/- per kg. He was entitled to a
commission of 3%. He also enclosed a demand draft for the balance due from him.
Abnormal loss
An abnormal loss is that which can be avoided by taking proper care or precaution.
Examples of abnormal loss are loss by theft, pilferage, fire etc.
This loss is not allowed to affect the consignment account as it will unduly affect profit.
Therefore, this loss is directly transferred to the profit and loss account and credited to
the consignment account.
The abnormal loss will not affect the books of the consignee.
One T.V set was completely damaged in transit and the insurance company paid Rs.
18,000/- towards the loss.
Ramesh sold 7 T.V sets @ Rs. 30,000/- each and paid Rs. 6,600/- towards insurance and
warehousing. He sent Rs. 1,80,000/- by a cheque. He was entitled to 5% commission.
10. Badri of Bangalore consigned 5,000 kgs of chemical to his consignee – Deepak of
Koppala. The cost of the chemical was Rs. 40/- per kg. Badri also paid the
following expenses – Rs. 250/- carriage, Rs. 1,250/- freight and Rs. 1,000/- as
insurance in transit. 500 kgs of chemical were accidentally destroyed while in
transit for which Badri received Rs. 12,500/- as insurance compensation.
Deepak immediately sent Rs. 50,000/- as his advance.
Goods may be sent by the consignor to the consignee at a higher price than the cost price.
Such a price is called the invoice price. The consignee is instructed to sell the goods at the
invoice price or at a higher price if possible. This is done in order to avoid the consignee
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knowing the profit earned by the consignor. The price after profit being so added is also
called the loaded price.
When the goods are sent to the consignee at invoice price, the goods sent to the consignee
is debited to the consignment account at the invoice price similarly, the closing stock of
the consignment is credited to the consignment account at invoice price. The
consignment account therefore will not reveal the profit as consignment sales are also
credited to the sales account at invoice price.
The following entries are necessary to eliminate profit (loading) from the goods and
enable the consignment account to reveal the profit.
The stock reserve (profit in the closing stock) is subtracted from the stock, in the balance
sheet and the stock is shown finally at the cost price.
At the commencement of the next year, the stock and stock reserve are transferred back
to the consignment account by passing the following journal entries:
Therefore, the stock will appear on the debit side and the stock reserve will appear on the
credit side of the consignment account.
These aspects - invoice price, loading, elimination of profit, will not affect the books of
the consignee in any way.
11. Naresh of Bangalore consigned on January 01, 2012, 100 rechargeable torches to
Chirag of Gadag, to be sold on behalf and at the risk of Naresh. The cost of
each torch was Rs. 500/- but the invoice price was Rs. 600/- each. Chirag was
instructed to sell the torch @ Rs.600/- each or at a higher price if possible.
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Naresh incurred Rs. 2,000/- on freight and insurance of the goods and immediately
received Rs. 20,000/- through a cheque as advance.
Chirag received the goods and incurred the following expenses – taxes Rs. 1,000/-, rent
Rs. 800/- and insurance Rs. 600/-. Chirag could sell 80 torches by July 31, 2012 at Rs.
50,000/-. He was entitled for a commission of 5% on the proforma invoice price and 25%
of any surplus price realized. Chirag, also sent a cheque for the balance due from him.
The consignment and goods sent on consignment accounts under this method will have
two columns on each. One is used for invoice price (loaded) amount and the other for
cost price. Any transaction relating to goods will be recorded in both – cost and invoice
price. These are generally goods sent and closing stock. The cost price columns are
operative and are used to calculate profit or loss on consignment. The invoice price
columns are merely memorandum columns. The invoice price columns need not be
either totalled or balanced, as they do not serve any purpose.
12. Ronak of Bangalore consigned 100 travel bags costing Rs. 400/- each to his
consignee – Janak of Hassan, at an invoice price of Rs. 700/- each, to be sold at
the risk and behalf of the former. Ronak also paid the following expenses –
packing Rs. 1,000/-, transportation Rs. 1,500/- and insurance Rs. 500/-.
Janak received the goods and paid Rs.1,000/- as clearing charges. He also sent Rs.
20,000/- to Ronak as advance. Janak sent an account sales to Ronak reporting the sales of
90 bags at a total amount of Rs. 67,500/-. He had further spent Rs. 5,000/- towards
warehousing, salesmanship and advertising. He was entitled for a selling commission of
10%. He had also enclosed an acceptance for the balance due to Ronak.
Prepare the consignment account and goods sent on consignment account with
memorandum in the books of Ronak.
The quantity of closing stock, when physically verified, may be found to be short. This
results in a loss and has to be adjusted. The units found to be missing must be valued on
similar lines of valuing closing stock. The following are the journal entries:
The loss of stock as explained above will not affect the books of the consignee, it is agreed
to be borne by the consignor.
Simultaneously, this loss will be recorded in the books of the consignee, by passing the
following journal entry:
13. Patil of Bangalore consigned 1,000 pens costing Rs. 100/- each to Manjunath of
Shivamogga, to be sold on behalf of and at the risk of Patil. Patil spent Rs.
3,000/- to send the goods to Manjunath.
Manjunath received the goods and immediately sent Rs. 30,000/- as his advance. He,
later sent an account sales to Patil stating that 900 pens had been sold @ Rs. 140/- each
and that his commission was 10% of the sales. He also mentioned that there was a
shortage of 10 pens, when a stock taking was done. Manjunath had enclosed an
acceptance for the balance due. According to the agreement, any loss arising because of
loss of goods had to be borne by the consignor himself.
18
Prepare the following ledger accounts in the books of the consignor- consignment
account and consignee’s account. Pass journal entries relating to the loss of stock.
14. Mohan of Bangalore consigned 500 computer key boards to his consignee –
Rohan of Haveri, to be sold on behalf and at the risk of the consignor. The cost
of each key board was Rs. 200/-. Mohan incurred Rs. 5,000/- towards expenses
of consignment.
Rohan received the consignment by spending Rs. 2,000/- towards handling charges. He
immediately sent to Mohan Rs. 40,000/- as advance.
Rohan sent an account sales to Mohan stating the following: 450 key boards were sold @
Rs.300/- each and that he had deducted his selling commission @10% from the sale
proceeds. He had enclosed a cheque for the balance due.
A stock taking of the unsold key boards revealed that there was a shortage of one unit.
According to the consignment agreement, any such loss had to be borne by the
consignee.
15. Babu of Bangalore sent 100 calculators to his consignee – Satish of Bellary to be
sold on behalf and at the risk of the consignor. The calculators cost Rs. 300/-
each. Babu spent Rs. 500/- to send the goods.
Satish received the goods by spending Rs. 500/- on handling, clearing and other charges.
He immediately sent Rs. 10,000/- to Babu as his advance. Satish was entitled to a selling
commission of 8%. Satish later sent an account sales to Babu stating that he had sold 90
calculators @ Rs. 410/- each piece.
Owing to import liberalization the value of such calculators came down to Rs. 250/-,
which affected the closing stock.
Nanadi Electronics, Poona consigned 5,000 units of Electronic Components @ Rs. 300
each to Mr.Manju of Mysore on 1st Jan 2010. Nanadi Electronics paid Rs.10,000 for
packing, Rs.40,000 for Freight charges and Rs.20,000 towards Insurance. During transit
200 units were destroyed and Insurance claim was settled at Rs.60,000 and was directly
paid to Consignor. Mr.Manju took delivery of the consignment on 05-01-2010 and
accepted bill for Rs.5,00,000 for 3 months. On 31-03-2010 Mr.Manju reported the
following a) 3000 units were sold @ Rs.420 each b) 1400 units were sold @ Rs.450 each on
Credit c) Expenses were: Unloading charges Rs.14,400, Godown Rent Rs.12,000,
Advertising Rs.10,000 and Salesmen's Salary Rs.30,000. Mr. Manju entitled to an ordinary
commission @ 5% on all sales. Consignee remitted the balance due from him through a
Bank draft.
Solution:
62,800 62,800
Working Notes:
3. Calculation of sales
4. Calculation of commission
2. (When Goods consigned at Invoice Price, Unsold Stock and Abnormal Loss
adjustment is given)
Amco Batteries Ltd. Bengaluru consinged 1.500 Batteries costing Rs.5,000 each invoiced to
Manju Eletricals Mangalore @ cost + 25%. The Consignor paid Rs.75,000 towards Freight
charges and Insurance Rs.30,000. During transit, it was found that 10 Batteries were
damaged and insurance company settled the claim for Rs.45,000. Manju Electricals
received the balance of consigned goods and paid unloading and clearing charges
Rs.14,900. They accepted a bill drawn for 3 months Rs.20,00,000 as an advance. Manju
Electricals sold 800 Batteries for cash @ Rs.6,500 each and 450 Batteries on Credit @ Rs.7,000
each. They spent Rs.42,000 for godown rent, Rs. 6,500 for Advertisement and Rs.30,000 as
Salesman Salary. The Consignee entitled to get an ordinary commission @ 5% on all sales
and Del-credere commission @2% on credit sales. Assume that Manju Eletricals remit the
balance dure to the consignor by Bank draft. Prepare Consignment a/c, Consignee’s a/c
and Abnormal loss a/c in the books of Amco Batteries Ltd.
-B.Com NOV./DEC.2010 MYU/20 Marks
Solution :
Working notes:
4. Sales
=Rs 5,700
Sagar Electronics, Bangaluru consinged 2,500 units of Electronic Components @ Rs. 400
each to Mr.Ramu of Mysore on 1st Jan 2010. Sagar Electronics paid Rs.5,000 for packing,
Rs.20,000 for Freight charges and Rs.10,000 towards Insurance. During transit 100 units
were destroyed and Insurance claim was setted at Rs.30,000 and was directly paid to
Consignor. Mr.Ramu took delivery of the consignment on 05-01-2010 and accepted bill for
Rs.2,50,000 for 3 months. On 31-03-2010 Mr.Manju reported the following:
a) 1500 units were sold @ Rs.420 each
b) 700 units were sold @ Rs.450 each on Credit
c) Expenses were: Unloading charges Rs.7,200, Godown Rent Rs.6,000, Advertising
Rs.5,000 and Salesmen's Salary Rs.15,000.
Mr. Manju entitled to an ordinary commission @ 5% and delcredare commission at 2.5% on
all sales. Consignee remitted the balance due from him through a Bank draft.
Prepare Consignment a/c and Consignee's a/c and Goods damaged in Transit a/c.
-B.Com NOV./DEC.2010 MYU/20 Marks
Solution:
Working Notes:
1. Expenses by Consignor -
Packing Rs.5,000+ Freight charges Rs.20,000 + Insurance Rs.10,000 =Rs 35,000
2 .Expenses by Consignee i.e. Manju
Unloading charges Rs.7,200+Godown Rent Rs.6,000+Advertising Rs.5,000 +Salesmen's
Salary Rs.15,000 =Rs33,200
3. Calculation of sales
(a) 1500 units x Rs.420 each ----------- Rs 6,30,000
(b) 700 units xRs.450 each on Credit--- ---- Rs 3,15,000
Total sales -----------------------------------Rs 9,45,000
4. Calculation of Commission
Ordinary commission @5% -------------------- Rs 9,45,000 x 5/100 = Rs 47,250
Delcredre commission @ 2.5% on all sales--- Rs 9,45,000 x2.5/100 =Rs 23,625
Total commission -------------------------------------------------------------Rs 70,875
5. Calculation of value of abnormal loss and actual abnormal loss amount
Note: To calculate abnormal loss on account of goods damaged in transit, only expenses incurred by
consignor is considered and expenses incurred by consignee are not considered.
Sagar sent 1000 articles to his agent Chandan at an invoice price of Rs.25 per article, which
is Cost +25% profit and paid freight and cartage Rs.920. Chandan sold 600 articles at Rs.30
per Article and sent an account sales deducting Rs.400 for storage charges and Rs.600 for
selling expenses. He charged 10% Commission on the gross sale proceeds and remitted
the amount due to Sagar. Chandan also informed Sagar that 100 articles had been damaged
in transit and they fetched only 70% of their cost. Prepare necessary Ledger accounts in the
books of Consignor.
B.Com Nov./Dec 2009 /MYU/20 Marks
Solution:
On 1st June 2009 ABC & Co., of Mangalore consigned 100 Cases of Toys to Manvi & Co., of
Mysore. The Cost of consignment amounted to Rs.7,500 but the goods were charged at pro-
forma invoice price so as to show a profit of 25% on Sales. The Consigner paid Rs.600
towards freight and insurance. On acceptance for Rs.3,000 bill was received from the
Consignee and it was discounted for Rs.2,900. The Consignee had paid Rs.1,000 towards
unloading and Rs.200 towards carriage. One Case was lost in transit and Rs.50 was
received from the insurance company by the Consignor in full settlement of the claims.
The Consignee has sold 80 Cases for Cash Rs. 12,000. The Consignee is entitled to a
commission of 5% on Sale Proceeds. The Consignee enclosed a Bank draft for the balance
due.
Prepare the necessary Ledger accounts in the books of ABC & Co.,
Solution:
106 106
Working notes:
1. Calculation of loading in goods sent on consignment
Value of cases of Toys consigned at invoice price = cost + profit
Loading / profit =25% on sales means 33.33% or 1/3 on cost
= Rs.7,500+1/3 of 7,500
=Rs7,500 +2,500
=Rs 10,000
2.Calculation of commission
Commission 5 % on sales of Rs12,000= Rs600
3. Calculation of amount of abnormal loss
Abnormal loss quantity = 01 case of Toys
Value of 01 case of Toys------------------------ = Rs. 100
Add: expenses by consignor=600 x1/100--------=Rs. 06
Add: Expenses by Consignee = Nil
Amount of abnormal loss= Rs. 106
Actual loss= Amount of abnormal loss – loading - Amount realised on sale of damaged
articles
Actual loss =Rs106 – Rs 25 – Rs 50 =Rs.31
4.Calculation of consignment stock
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a. Calculation of Commission:
Sales -80 cases x Rs220= 17,600
Commission @ 5% on sales----17,600 x5/100 = Rs.880
b. .Calculation of value of Consignment stock
No. of cases consigned---100 cases
Less : No of cases sold--- 80 cases
No of cases unsold--- 20 cases
Proportionate amount of cost of unsold cases -20cases x 150 = 3000
Add: Proportionate amount of expenses by consignor -800x 20/100 = 160
(Freight600+ insurance 200)
Add: Expenses by consignee: Carriage= Rs.100 x 20/100 = 20
Consignment stock =Rs3,000 + Rs 160 +Rs 20 = 3180
Solution:
Working Notes:
33
Show the necessary Ledger accounts as they would appear in the books of Jaykumar and
Babu.
Solution:
1. Expenses by consignor
(Freight,Insurance & Handling charges) =Rs.1,200+ Rs.1,000+ Rs.500 = Rs 2,700
2. Expenses by Babu
(Godown Rent &Miscellaneous Expenses)=Rs1, 500 + Rs.1,000 = Rs 2,500
3. Sales
Cash sales= Rs 25,000
Credit sales=–Rs28, 000
Total sales =Rs53, 000
4. Commission
Ordinary commission @ 10% on all sales= 53,000 x 10/100 =Rs5, 300
Del-credre Commission @ 5% on cr sales =Rs 28,000 x 5/100 = Rs 1,400
Total commission =Rs6, 700
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JayaKumar’s Account
Date Particulars Amount Date Particulars Amount
To Bank a/c1 2,500 By Bank a/c 25,000
To Commission 2 6,700 By Consignment Drs 28,000
To Bank a/c 20,000 a/c
To Balance c/d 23,800
53,000 53,000
Commission Account
Date Particulars Amount Date Particulars Amount
To Bad debts a/c 3,000 By JayaKumar’s a/c 6,700
To P&L a/c 3,700
6,700 6,700
Working Notes:
1. Expenses by Babu
(Godown Rent &Miscellaneous Expenses) =Rs1, 500 + Rs.1, 000 = Rs 2,500
2. Commission Calculation
Ordinary commission @ 10% on all sales= 53,000 x 10/100 =Rs5,300
Del-credre Commission @ 5% on cr sales =Rs 28,000 x 5/100 = Rs 1,400
Total commission =Rs6, 700
9. (When Loss & Stock Reserve adjustment is given)
2000 Boxes of Tea costing Rs.10,000 are consigned to Periakulam at an invoice price of
Rs.15, 000. Out of which 100 boxes are totally destroyed by fire and the claim was admitted
by the Insurance Company, 75% of the invoice price of the goods lost. The expenses of the
Consignment prior to loss are Rs.2, 000 and after losses are Rs.3, 900 of which Rs.1, 900 are
of non-recurring nature. The commission and selling expenses are Rs.6, 000. An account
sale is received for 1,100 boxes showing gross sales proceeds of Rs.14, 000.
Show Consignment account and loss by fire accident in the books of Consignor.
(Ans: Loss Rs.1, 700/B.COM/BU)
36
Solution:
Working notes:
1. Expenses by Consignor
(Expenses prior to loss + expenses after loss)= Rs.2, 000 + Rs.3, 900 =5,900
2. Expenses by Consignee & commission = Rs 6,000
3. Loading in goods sent on consignment
Invoice price of goods consigned =Rs 15,000
Cost price of goods consigned =Rs 10,000
Loading = Rs 5,000
4. Loss by fire
No of Boxes destroyed by fire =100
Value of damaged boxes= 100 x 15,000/2,000--------------= Rs750
Add: Proportionate expenses prior to loss------= Rs 2,000 x 100 /2000=Rs 100
Total loss=Rs 850
Claim 75% of invoice price = Rs750 x 75 /100 =Rs 563
5. Loading included in the loss= Rs 750 – Rs 500 = Rs 250
6.Actual loss =Rs 850 – Rs 250 - Rs 563= Rs 37
7. Value of consignment Stock:
No of boxes consigned------------- =2,000
Less: No of boxes sold-------------=1,100
Less: No of boxes destroyed-------=100
No of boxes unsold-----------------=800
Value of 800 boxes @ Invoice price = 800 x 15,000/2,000 =Rs 6,000
Add: proportionate expenses prior to loss =800 x Rs 2,000/2000 boxes=Rs800
Add: proportionate nonrecurring expenses after loss = 800 x1900/1900boxes=Rs 800
Total value of stock =7,600
Loading in the consignment stock ( Stock Reserve)
Total loading of all boxes = Rs5, 000
So loading for 800 boxes=800 x 5000/2000 = Rs 2,000
Consignee’s A/C
Date Particulars Amount Date Particulars Amount
To Consignment to 14,000 By Consignment to 6,000
periakulam a/c Periakulam a/c
By Balance c/d 8,000
14,000 14,000
850 850
Williams of Madras consigned 300 chests of Tea at Rs.2,000 per chest to Johnson of New
Delhi paying freight Rs.4,000 and other expenses Rs.2,000. Johnson sold 250 chests at
Rs.2,500 per chest on credit and 25 chests at Rs.2,200 per chest for cash. Johnson spent for
freight and octroi Rs. Rs.3,000 and other expenses Rs.1,000 He remitted the amount due to
Williams after deducting his commission at 5% (normal), 2.5% (over riding), and ½% del-
credere commission (del-credere commission to be given on total sales). Johnson found
that one customer to whom credit of 40 days was allowed paid only Rs.4,500 out of the
total amount of Rs.5,000 due from him in full settlement of account. Other customers paid
the amount on due dates.
Solution:
Calculation of Commission:
a. Normal Commission = 680000x5% = 34,000
b. Over riding Commission = 680000x2.5% = 17000
c. Delcredere Commission = 680000x1/2 = 3,400
Total = 54400
Debit Credit
Date Particulars L.F
Rs. Rs.
Williams of Madras a/c Dr 4,000
1 To Bank a/c 4,000
(Being the consignment expenses incurred)
Bank a/c Dr 55,000
Consignment Debtor a/c Dr 6,25,000
2 To Williams of Madras a/c 6,80,000
(Being cash and credit sales made & sent a/c
sales)
Bank a/c Dr 6,24,500
Williams of Madras a/c Dr 500
3 To Consignment Debtor a/c 6,25,000
(Being the collection from debtors and the bad
debts debited to the consignor’s a/c)
Williams of Madras a/c Dr 54,400
4 To Commission a/c 54,400
(Being commission due from consignor)
Williams of Madras a/c Dr 6,21,000
5 To Cash / Bank a/c 6,21,000
(Being the final payment made )
1. What is consignment?
2. Who is a consignor?
3. Who is a consignee?
4. What is a proforma invoice?
5. What is an account sales?
6. What is the nature of consignment account?
7. What is meant by del-credere commission?
8. What is meant by over riding commission?
9. Who bears the loss of bad debts in consignment?
40
Mention whether the following statements are true or false and also explain why.
Problems
Keshav of Mysore consigned 500 saris of the value of Rs. 5,000/- each to his consignee
Sanjay of Davengere. Keshav paid Rs. 10,000/- as expenses for the consignment. Sanjay
immediately after receiving the goods, sent an advance of Rs. 2,00,000/-.
Sanjay in the due course, sent an account sales stating that all the saris were sold @
Rs.7,000/- each and the total consignment expenses incurred by the consignee being Rs.
41
4,000/-. Sanjay was entitled to a 7% commission. Sanjay had also enclosed a demand
draft for the balance.
Answer: Consignment profit Rs. 7,41,000/-, demand draft for the balance Rs. 30,51,000/-
Basavaraja sold all the shawls @ Rs. 420/-each. He was entitled for a selling commission
of 8% . Basavaraja settled the balance due to Dheeraj through a bank draft.
Mr. Karthik of Bangalore, consigned goods worth Rs. 5,70,000/- to Gopal of Arsikere to
be sold on consignment. Karthik also incurred expenses of Rs. 10,000/-.
Gopal received the goods and incurred expenses of Rs. 7,000/-. Gopal sent a cheque for
Rs. 40,000/- immediately to Karthik as his advance.
Gopal sold all the goods as follows: Cash sales – Rs. 5,00,000/- and credit sales Rs.
4,00,000/-. A debtor worth Rs. 3,000/- did not pay. Gopal was entitled for a 5% selling
commission and 3% del-credere commission.
Answer: Transferred to profit and loss a/c - Commission Rs. 45,000/- and del-credere
commission Rs. 24,000/-
Problem 4: Bad debts in the absence of del-credere commission, and bill discounted.
42
Raghu of Bangalore consigned 200 batteries to his consignee Babu of Mandya . The cost
per battery was Rs. 1,000/-. Raghu paid Rs. 1,000/- towards packing and transportation
expenses.
Babu received the batteries and immediately sent Rs. 14,000/-as advance to Raghu. Babu
sold all the batteries as follows: 150 batteries for cash @ Rs.1400/- each and 50 batteries
@Rs.1,600/- on credit. He, however could not collect Rs. 4,000/- from a debtor. The
consignee was entitled for a 3% selling commission. The consignee’s expenses amounted
to Rs. 2,000/-.
Babu sent an account sales stating the above and also enclosed an acceptance for the
balance. Raghu received the bill and got it immediately discounted at a discount of Rs.
1,300/-.
Answer: Profit Rs. 73,000/- and due from consignee Rs. 2,61,300/-
Dinesh received the consignment and incurred Rs. 1,300/- as expenses. He immediately
sent Rs. 50,000/- as advance to Pramod. Dinesh reported that all the lampshades were
sold at the price of Rs. 225/- each. The consignee was entitled to a 15% selling
commission. Dinesh sent an account sales detailing the above and also enclosed bank
draft with the same towards the balance.
Prepare the consignment, goods sent on consignment and consignee’s accounts in the
books of Pramod. Also prepare the account sales.
Answer: Loss on consignment Rs. 11,750/-, final settlement by consignee Rs. 1,39,950/-
Problem 6: Goods returned, consignment stock and ledger accounts in the books of
consignor.
Mr. Sumit of Bangalore, consigned 400 Wrist watches costing Rs. 500/- each to Girish of
Raichur. He spent the following amounts: packing Rs. 4,000/-, transportation Rs. 7,000/-
and insurance Rs. 2,000/-.
Girish already had 50 such wrist watches as the closing stock of the previous period. He
received the fresh consignment by spending Rs. 9,000/- towards various expenses.
Girish was entitled to 10% selling commission and 3% del-credere commission. He,
immediately after receiving the goods sent Rs. 50,000/- as an advance.
43
Girish sent an account sales stating that he was able to sell 390 wrist watches @ Rs. 800/-
each. He returned 30 wrist watches. He also enclosed a cheque for the balance due to
Sumit. It was the policy of Sumit to value any closing stock on returns at cost price itself.
Girish had also spent Rs. 350/- on returning the goods.
Prepare the consignment, consignee’s and the goods sent on consignment account in the
books of Sumit.
Madhava received the cricket bats at Mangalore by spending the following: clearing
expenses Rs. 900/- and cartage Rs. 600/-. Madhava immediately sent a cheque for Rs.
90,000/- to Kesava as advance.
Prepare the following accounts in the books of the consignor – consignment account,
consignee’s account and goods sent on consignment account and consignor’s account in
the books of the consignee.
Answer: Consignment profit Rs. 37,140/- and final balance settled by consignee Rs. 1,47,140/-
Mr. Anil of Bangalore consigned 700 units of a chemical to his consignee – Sunil of
Raichur. The cost per unit of chemical was Rs. 220/-. Anil paid the following expenses:
packing Rs. 5,000/-, transportation Rs. 1,000/-, insurance Rs. 2,000/-.
44
Sunil received the chemicals by paying Rs. 6,300/- towards various expenses. He
immediately sent a cheque of Rs. 35,000/- as his advance.
Sunil, later sent an account sales which reported sales of 650 units of chemical @Rs. 400/-
per unit. He was entitled to a commission of 5%. He also enclosed a demand draft for
the balance due from him.
Answer: Consignment profit Rs. 86,125/-, final balance settled by the consignee Rs. 2,05,700/- and
consignment stock Rs. 7,425/-.
One washing machine was completely damaged in transit and the insurance company
paid Rs. 10,000/- towards the loss.
Jayaraj sold 15 washing machines @ Rs. 19,000/- each and paid Rs. 8,000/- towards
insurance and warehousing. He sent Rs. 1,00,000/- by a cheque. He was entitled to 4%
commission.
Answer: Consignment profit Rs. 21,850/-, final balance settled by the consignee Rs. 1,65,600/-,
abnormal loss transferred to profit and loss a/c Rs. 6,250/-.
Rahul of Bangalore consigned 7,500 kgs of chemical to his consignee – Vijay of Kodagu.
The cost of the chemical was Rs. 25/- per kg. Rahul also paid the following expenses –
Rs. 500/- carriage, Rs. 2,000/- freight and Rs. 4,000/- as insurance in transit. 300 kgs of
chemical were accidentally destroyed while in transit for which Rahul received Rs.
4,000/- as insurance compensation. Vijay immediately sent Rs. 15,000/- as advance.
c) Commission @ 3% on sales.
d) Loss of 40 kgs of chemical (unavoidable).
e) Vijay had enclosed a cheque for the balance due.
Sanjeev of Bangalore consigned on January 01, 2012 500 T-Shirts to Venkatesh of Bidar,
to be sold on behalf and at the risk of Sanjeev. The cost of each T-Shirt was Rs. 200/- but
the invoice price was Rs. 300/- each. Venkatesh was instructed to sell the T-Shirt @
Rs.300/- each or at a higher price if possible.
Sanjeev incurred Rs. 3,000/- on freight and insurance of the goods and immediately
received Rs. 17,000/- through a cheque as advance.
Venkatesh received the goods and incurred the following expenses – taxes Rs. 2,000/-,
rent Rs. 1,000/- and insurance Rs. 500/-. Venkatesh could sell 450 T-Shirts by July 31,
2012 at Rs. 1.40,000/-. He was entitled for a commission of 4% on the proforma invoice
price and 20% of any surplus price realized. Venkatesh also sent a cheque for the
balance due from him.
Answer: Consignment profit Rs. 37,600/-, final settlement by the consignee Rs. 1,13,100/- and
Consignment stock Rs. 15,500/-
Rajendra of Bangalore consigned 250 wallets costing Rs. 700/- each to his consignee –
Jitendra of Sakleshpura at an invoice price of Rs. 900/- to be sold at the risk and behalf of
the former. Rajendra also paid the following expenses – packing Rs. 2,000/-,
transportation Rs. 500/- and insurance Rs. 500/-.
Jitendra received the goods and paid Rs.500/- as clearing charges. He also sent Rs.
50,000/- to Rajendra as advance. Jitendra sent an account sales to Rajendra reporting the
sales of 220 wallets at a total amount of Rs. 2,10,000/-. He had further spent Rs. 2,000/-
46
Prepare the consignment account and goods sent on consignment account with
memorandum in the books of Rajendra.
Sanath of Bangalore consigned 400 leather belts costing Rs. 500/- each to Sharath of
Chikmagalur, to be sold on behalf of and at the risk of Sanath. Sanath spent Rs. 2,000/-
to send the goods to Sharath.
Sharath received the goods and immediately sent Rs. 40,000/- as his advance. He, later
sent an account sales to Sanath stating that 350 belts had been sold @ Rs. 800/- each and
that his commission was 15% of the sales. He also mentioned that there was a shortage of
5 belts, when a stock taking was done. Sharath had enclosed an acceptance for the
balance due. According to the agreement, any loss arising because of loss of goods, had
to be borne by the consignor himself.
Prepare the following ledger accounts in the books of the consignor, consignment
account and consignee’s account. Pass journal entries relating to the loss of stock.
Answer: Consignment profit Rs. 61,250/-, final settlement from consignee Rs. 1,98,000/- and stock
deficiency Rs. 2,525/-
Suhas received the consignment by spending Rs. 4,000/- towards handling charges. He
immediately sent to Tejas Rs. 1,00,000/- as advance.
Suhas sent an account sales to Tejas stating the following: 365 lampshades were sold @
Rs.1,400/- each and that he had deducted his selling commission @10% from the sale
proceeds. He had enclosed a cheque for the balance due.
A stock taking of the unsold lampshades revealed that there was a shortage of two
lampshades. According to the consignment agreement, any such loss had to be borne by
the consignee.
Answer: Consignment profit Rs. 1,55,125/-, final settlement by consignee Rs. 3,57,570/- and value of
loss Rs. 1,670/-.
Dilip of Bangalore sent 500 automobile parts to his consignee – Philip of Bagalkot to be
sold on behalf and at the risk of the consignor. The automobile part cost Rs. 700/- each.
Dilip spent Rs. 2,500/- to send the goods.
Philip received the goods by spending Rs. 1,000/- on handling, clearing and other
charges. He immediately sent Rs. 50,000/- to Dilip as his advance. Philip was entitled to
a selling commission of 10%. Philip later sent an account sales to Dilip stating that he had
sold 400 automobile parts @ Rs. 1,200/- each piece.
Owing to a recession, the value of such automobile parts came down to Rs. 600/-, which
affected the closing stock.
Answer: Consignment profit Rs. 1,39,200/-, balance due from the consignee Rs. 3,81,000/- and closing
Stock Rs. 60,700/-
Srinivas of Tirupathi consigned 100 T.V sets costing Rs.15,000, to Nagarjun of Guntur to be
sold on consignment basis. He incurred the following expenses: Freight Rs.1,000, Loading
and Unloading charges Rs.250 and Insurance Rs.500.
Nagarjun sold 85 T.V sets for Rs.14,45,000 and paid Rs.1,000 as shop rent which is to be
borne by Srinivas as per terms and conditions of consignment. Consignee is entitled to a
commission of Rs.100 per T.V set sold. Assume that Nagarjun settled the account by
sending bank draft to Srinivas.
Show the necessary Ledger accounts in the books of Srinivas of Tirupathi.
(B.Com April 2001)
(Ans: Consignment Stock: Rs. 2,25,263 and Profit Rs.1,59,013)
Mehta of Mangalore sent goods to Jain of Jaipur at an invoice price of Rs. 29,675. He paid
freight Rs.762, Carriage Rs.231 and Insurance Rs.700. On the way one-fourth of the
consignment was lost by fire and a claim of Rs.5,000 was received.
Show how you will deal with the claim and loss due to fire in the books of Consignor.
Calculate the amount also. (B.Com April 1991)
(Ans: Abnormal loss: Rs.7,842 (31,368x1/4) (Loss charged to P&L a/c Rs.2,842)
Ramadas of Mumbai consigned 100 Cases of Medicine costing Rs.1,000 per case to Krishna
of Bangaluru on 1st January 2012. The goods were to be sold at 25% above the cost. Any
deficiency in selling price was to be borne by Krishna. Krishna was however entitled to a
special commission at 25% of any surplus price realised. Krishna was further entitled to an
ordinary commission of 5% and Del credere commission of 2.5% on all Sales.
Ramadas incurred the following expenses: Packing charges Rs.6,000, Loading charges
Rs.1,000, Lorry hire Rs.12,000, Railway freight Rs.21,000. The account sales received from
Krishna revealed the following: 40 Cases were sold at Rs.1,500 per case, 30 cases were sold
at Rs.1,200 per case, 10 cases were sold at Rs.1,300 per case, 5 cases of medicine were stolen
by a dishonest employee and a compensation of Rs.2,000 was realised from him. Krishna
incurred unloading charges of Rs.2,000 and warehouse rent of Rs.3,000. Krishna enclosed a
bank draft for the balance amount due.
Write up the Consignment a/c, Krishna’s a/c and Abnormal Loss a/c in the books of
Ramadas. Entries are to be made at Cost Price.
(B.Com MU April.1992)
( Ans: Unsold Stock 15 Cases @ Rs.1,420 each of Rs.21,300, Abnormal loss 5 cases @
Rs.1,420 of Rs.7,100 , Special Commission Rs.2,625 – deficiency to be borne Rs.1,500= Net
amount Rs.1,125) and Consignment Loss Rs.16,900)
You are required to show the consignment account and Y’s account in the books of X.
(B.Com April 2000)
(Ans: Commission Rs.1,63,500, Consignment Stock 25 sets @ Rs.2,51,150 and Profit
Rs.6,43,650)
On September 1992 goods of the value of Rs.2,64,000 was consigned by YES of Bangaluru
to his agent JAY of Mysore at proforma invoice price of 20% profit on cost price. YES of
Bangaluru paid insurance and other forwarding charges on consignment amounting to
Rs.10,000. JAY of Mysore allowed Rs.2,000 being establishment cost. He was entitled to
5% commission on gross sales and an additional 3% del credere commission on credit sales
only. He made an expense of Rs.2,040 as landing charges.
Three – fourths of the goods were sold at 33.33% profit on cost, half of which were credit
sales. One half of the balance of goods were destroyed by fire and a claim lodged for
Rs.28,000 was settled at a discount of 10%. The balances of goods were in stock.
Show the Consignment a/c and the Loss of Stock on Consignment a/c as on 31.12.1992 in
the books of YES of Bangaluru.
(B.Com April 1993)
Ans.: (Consignment Stock Rs.41,105, Loss of Stock Rs.34,505 and Consignment Profit
Rs.37,810)
Jagan of Ahmadabad consigned 100 cases of Candles to Mohan of Baroda, which cost him
Rs.30 per case. He incurred the following costs: packing Rs.40, carriage Rs.20 and railway
freight Rs.40. Some of the cases were damaged in transit and Mohan took delivery of 90
cases only. Mohan spent Rs.10 for cartage, Rs.40 for godown rent and sold the consignment
at Rs.35 per case. He sent the net amount to Jagan after deducting expenses and his
commission at 5% on sale proceeds. Jagan received Rs.80 from railway as damages.
(Ans : Candles damaged – 10 Cases of Rs.310 – Rs.80 railway claims= Rs.230 Net claims,
Commission Rs.158 and Consignment Profit Rs.152)
‘B’Lal’ of Bombay sent on consignment to C’Sen’ of Calcutta 300 Boxes of goods at Rs.1250
each on 1st July 1989 to be sold on his account at his risk for 10% commission. ‘B’Lal’
incurred Rs.3000 expenses on dispatching the goods to ‘C’Sen’. ‘B’Lal’ incurred a bill for
Rs.2,00,000 at 2 months from ‘C’Sen. On 30th Sept. 1989 ‘C’Sen sent an Account Sales
disclosing that 200 boxes were sold for Rs.1,600 each and selling expenses Rs.9,000.He sent
a draft for the net amount due.
On April 2012 Philips Ltd. of Chennai consigned to R.Shankar a radio dealer at Bengaluru,
200 radio sets invoiced at Rs.300 per set. The cost of each set was Rs.250 and railway freight
of Rs.600 was paid by the Consignor, other expenses being paid by consignee. On 1 st July
2012 R.Shankar remitted an A/C Sales showing that 160 sets have been sold at the price of
Rs.300 per set. They deducted unloading charges and cortege of Rs.30, establishment
expenses Rs.120 and commission at 5% on Sales, remitting the draft for the balance.
Ravi of Calcutta sends 100 Sewing Machines on consignment to Meera of Patna. The cost of
each machine is Rs.1,300, but the invoice price is at the rate of Rs.1,600 each. Ravi spends
Rs.40 on packing of each machine. Meera received the consignment and immediately
accept Ravi’s bill of exchange for Rs.8000. Subsequently Meera informs Ravi that 80
machines have been sold at Rs.1,750 each. Expenses paid by Meera are; freight Rs.700
(Calcutta to Patna) godown rent Rs.50. Meera is entitled to a commission of 6% on Sales
and 2% del credere commission.
Write up Consignment a/c & Goods sent on Consignment a/c in the Consignor books.
(April 1991& Nov.1996/ BU)
51
Mitra sent goods of Rs.20,000 on consignment to Sakar & Co.,. He spent Rs.1,800 for freight
and insurance on it. Consignee sold some of the goods for Rs.25,000, spent Rs.500 as
godown rent and Rs.600 as wages. Closing stock with consignee was Rs.5,000. Commission
on Sales is 5%.
Prepare Consignment a/c in the books of Consignor and Consignor a/c in the books of
Consignee.
(Nov.1991/BU)
Aloknath of Bombay consigned 100 cases of goods to Ramnath of Madras to be sold on his
risk. The cost of one case of goods was Rs.150. Aloknath paid freight Rs.600 and insurance
Rs.200. Ramnath sent a Bank draft to Aloknath for Rs. 10,000 towards advance and sent an
Account Sales showing that 80 cases were sold at Rs.220 each. Expenses incurred by
Ramnath were, Carriage Rs.100, godown rent Rs.500 and advertisement Rs.300. He is
entitled to a commission of 5% on Sales.
On 1st Sept.1990 S.Gupta of Bombay sent 500 cases of goods at Rs.150 each to Sriram of
Bangaluru to be sold on his account and at his risk for 7.5% commission and 2.5% del
credere commission and incurred Rs. 5,500 towards expenses. S.Gupta received an advance
52
of Rs.20,000. On1st Dec.1990 he received an account sales stating that 300 cases have been
sold at Rs.230 each and another 100 cases at Rs.220 each. Sriram has incurred unloading
expenses Rs.750 and selling expenses Rs.1,000 and he sent a Bank draft for the net amount
due.
Mr.Joseph of Bangalore consigned 500 Toys to Mr.Pinto of Mysore to be sold on his account
and at his risk. The cost of the Toy was Rs.200. Mr. Joseph paid Rs. 5,500 as freight and
insurance and received Rs.40,000 as advance from Mr.Pinto. Pinto paid Rs.1,000 as Octroi
and carriage and Rs.1,500 as rent and Rs.1,200 as insurance. 410 Toys were sold by Pinto for
Rs.1,10,000. He is entitled to a commission of 5% on Sales at Rs.250 per Toy and 25% of any
surplus price realised.
Krishna Murthy of Bangalore sent a consignment of 2,000 articles to his agent Sri Raghvan
of Tumkur at an invoice price of Rs.20 per article. Railway charges, cartage and insurance
amounted to 10% of the total invoice price. Raghvan sold 1,500 articles at Rs.30 each and
sent an account sales enclosing a Bank draft for the balance after deducting i) his advance
or Rs.5,000, ii) his expenses Rs.500 and iii) his commission at 10% on gross sales. 100 articles
were lost in transit and the insurance company admitted the claim for Rs.1,100.
.
Show the Consignment account and Consignee account in the books of the Consignor.
((Nov. 1993/BU)
Atlas cycles Ltd. Madras forwarded 100 cycles to Pai Traders of Mysore to be sold on
consignment basis. The cost of each cycle was Rs.800. Atlas Cycles Ltd incurred Rs.2,000
towards freight and insurance. 10 Cycles were destroyed due to accident in transit. Pai
Traders received the rest of the consignment and gave an acceptance for Rs.20,000 in
favour of Atlas Cycles Ltd. Paid Traders sold 80 cycles for Rs.1,150 each. They incurred
Rs.1,800 for octroi and carriage and Rs.1,200 towards godown rent. They remitted the
balance due after deducting 5% ordinary commission and 2.5% del-credere commission.
Show the consignment account and Consignee account in the books of the Consignor.
(Nov.1994/BU)
53
On 1.1.1995 Balu of Bangalore consigned 100 cases (cost price Rs.7,500) at a proforma
invoice of 25% profit on Sale, to his agent Khan of Kolar. On the same date, Balu paid non-
recurring expenses of Rs.600. On 10.01.1995, Khan took delivery and paid Rs.1,200 for
Octroi and other duties and remitted Rs.4,000 as advance. On 31.01.1995 he sold 80 cases
for Rs.10,500. Khan is entitled to 5% commission on gross sales and 10% on sale price in
excess of the invoice price.