Consignment Accounting
Chartered Accountancy CPT Course Lecture 12 – Consignment Accounting
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Points to be kept in mind
Consignor remains the owner of goods even after sending to consignee. Consignor does not send any Invoice rather a Performa invoice. The Amount of Sales belongs to Consignor. All the exp. are to be borne by Consignor. If borne by consignee, recoverable from consignor. Consignee entitled to Commission. Consignee entitled to de-credere commission if he is responsible for bad debts. Consignee sends a statement called Account Sales, periodically.
Session 1, Section A Fundamentals of Accounting Quick Revision Notes
Important Concept
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2
Important Terns & Concepts
Accounting Entry Consignment to ___ A/c Dr. To Goods sent on consignment A/c Consignment to ___ A/c Dr. To Cash/Bank A/c Consignment to ___ A/c Dr. To Consignee Consignee Dr. To Consignment to ___ A/c Consignment to ___ A/c Dr. To Consignee Cash/Bank A/c Dr. To Consignee Stock on Consignment A/c Dr. To Consignment to ___ A/c Consignment to ___ A/c Dr. To P. & L. A/c Goods sent on consignment A/c Dr. To Trading Account
Transaction Goods sent on consignment Exp. Incurred by Consignor Exp. Incurred by Consignee For Sale done by Consignee Commission due to Consignee Amount received from Consignee For unsold goods on consignment Transferring profit on consignment Transferring goods sent on consignment to Trading A/c
1. Valuation of Stock: Stock should be valued at cost or net realizable value whichever is lower. In case of consignment, cost means: Cost of Goods to Consignor + Exp. incurred till the goods reach the premises of the consignee 2. Goods invoiced above cost: If goods are booked at higher than cost, the effect of loading must be removed by additional entries. Additional Entries: 1. Goods sent on Consignment A/c Dr. To Consignment to ____ A/c (reversing loading in goods sent on consignment) 2. Consignment to _____ A/c Dr. To Stock Reserve A/c (reversing loading in value of
1
Points to be kept in mind
Consignor remains the owner of goods even after sending to consignee. Consignor does not send any Invoice rather a Performa invoice. The Amount of Sales belongs to Consignor. All the exp. are to be borne by Consignor. If borne by consignee, recoverable from consignor. Consignee entitled to Commission. Consignee entitled to de-credere commission if he is responsible for bad debts. Consignee sends a statement called Account Sales, periodically.
Session 1, Section A Fundamentals of Accounting Quick Revision Notes
Important Concept
3
2
Important Terns & Concepts
Accounting Entry Consignment to ___ A/c Dr. To Goods sent on consignment A/c Consignment to ___ A/c Dr. To Cash/Bank A/c Consignment to ___ A/c Dr. To Consignee Consignee Dr. To Consignment to ___ A/c Consignment to ___ A/c Dr. To Consignee Cash/Bank A/c Dr. To Consignee Stock on Consignment A/c Dr. To Consignment to ___ A/c Consignment to ___ A/c Dr. To P. & L. A/c Goods sent on consignment A/c Dr. To Trading Account
Transaction Goods sent on consignment Exp. Incurred by Consignor Exp. Incurred by Consignee For Sale done by Consignee Commission due to Consignee Amount received from Consignee For unsold goods on consignment Transferring profit on consignment Transferring goods sent on consignment to Trading A/c
1. Valuation of Stock: Stock should be valued at cost or net realizable value whichever is lower. In case of consignment, cost means: Cost of Goods to Consignor + Exp. incurred till the goods reach the premises of the consignee 2. Goods invoiced above cost: If goods are booked at higher than cost, the effect of loading must be removed by additional entries. Additional Entries: 1. Goods sent on Consignment A/c Dr. To Consignment to ____ A/c (reversing loading in goods sent on consignment) 2. Consignment to _____ A/c Dr. To Stock Reserve A/c (reversing loading in value of