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Consignment-Quick revision notes

Points to be kept in mind

Consignor does not send any Invoice rather a Performa invoice.

All the exp. are to be borne by Consignor. If borne by consignee, recoverable from consignor.

Consignee entitled to de-credere commission if he is responsible for bad debts.

Sales, periodically

2. Transaction Accounting Entry

Accounting EntriesIn the books ofconsigneeIgnore: 1. Entries for Goods sent onConsignment; 2. Exp. incurred by Consignor.Record: 1. Entries for advance sent byconsignee to consignor; 2. Entries for makingsales; 3. Exp. incurred by Consignee; 4.

Earning Commission.

3. Important Concept

1. Valuation of Stock: Stock should be valued at cost or net realizable value whichever is lower. In case of consignment, costmeans:Cost of Goods to Consignor+ Exp. incurred till the goods reach the premises of the consignee2. 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 closing stock)

3. Abnormal Loss: 1. Find out the cost of the goods lost2. Pass the entry: P. & L. A/c Dr.

To Consignment to ______ A/c4. Normal Loss: Spread over the entire consignmentCost per unit = Total Cost + Expenses incurred / Qty available after normal loss5. Return of Goods from the consignee: Goods valued at the price at which it was consigned to consignee

Exp. incurred by the consignee to send those goods back to consignor are not taken into consideration.

Goods sent on consignment Consignment to ___ A/c Dr.To Goods sent on consignment A/c

Exp. Incurred by Consignor Consignment to ___ A/c Dr.To Cash/Bank A/c

Exp. Incurred by Consignee Consignment to ___ A/c Dr.To Consignee

For Sale done by Consignee Consignee Dr.

To Consignment to ___ A/c

Commission due to Consignee Consignment to ___ A/c Dr.To Consignee

Amount received from Consignee Cash/Bank A/c Dr.To Consignee

For unsold goods on consignment Stock on Consignment A/c Dr.To Consignment to ___ A/c

Transferring profit on consignment Consignment to ___ A/c Dr.To P. & L. A/c

Transferring goods sent onconsignment to Trading A/c

Goods sent on consignment A/c Dr.To Trading Account

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Joint venture- Quick revision notes

Common entries to all

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Question on non profit organisation

Q1 From the information given below prepare Receipts and Payments Accountfor the year ending 31st December, 2006.

Opening Balance : Cash in hand

1650 Cash at Bank

18250

Purchase of Books 10000

Purchase of Sports Material 20000

Subscription 15000 Purchase of Bicycle 2000

Entrance Fees 1200 Sale of Investment 25000

Donation 18000 Life Membership Fees 4000

Salaries 16000 Rent paid 12000

Stationery 500 Purchase of Development Bonds 10000

Insurance Premium 800 Closing Balance :

Sale of old Furniture 1540 Cash in hand 1510

Interest on Securities 3670 Cash at Bank 20000

Lockers Rent 4500