Accounting - II 5.

Solutions to
Text Book Exercises
Chapter – 5

CONSIGNMENT ACCOUNTS

1. Consignment of Goods at Cost Price :

Solution – 1 :
Journal entries in the books of Prakash (Consignor)

Date Particulars L.F. Debit Credit

Rs. Rs.
Calcutta Consignment a/c Dr. 10,000
To Goods sent on consignment a/c 10,000
(Being goods sent on consignment)
Calcutta Consignment a/c Dr. 2,000
To Cash a/c 2,000
(Being the consignment expenses paid)
Calcutta Consignment a/c Dr. 900
To Kali a/c 900
(Being the expenses paid by consignee)
Kali a/c Dr. 18,000
To Calcutta Consignment a/c 18,000
(Being sale of goods by Kali)
Calcutta consignment a/c Dr. 900
To Kali a/c 900
(Being commission paid to consignee)
Calcutta Consignment a/c Dr. 4,200
To Profit and Loss a/c 4,200
(Being the transfer of profit on profit and
loss a/c)
Goods sent on consignement a/c Dr. 10,000
To Trading a/c 10,000
(Being goods sent on consignment
transferred to trading a/c)

Solution – 2 :
5.2 Consignment Accounts

Journal entries in the books of Rao & Company (Consignor)

Date Particulars L.F. Debit Credit

Rs. Rs.
Tirupathi Consignment a/c Dr. 30,000
To Goods sent on consignment a/c 30,000
(Being goods sent on consignment)
Tirupathi Consignment a/c Dr. 1,000
To Cash a/c 1,000
(Being the consignment expenses paid)
Bills receivable a/c Dr. 10,000
To Srinivasa & Company a/c 10,000
(Being the acceptance for bill received
for three months)
Bank a/c Dr. 9,900
Discount a/c Dr. 100
To Bills receivable a/c 10,000
Srinivas & Company a/c Dr. 40,000
To Tirupathi Consignment a/c 40,000
(Being sale of goods by Srinivas & Co.)
Tirupathi Consignment a/c Dr. 950
To Srinivas & Company a/c 950
(Being expenses paid by consignee)
Tirupathi Consignment a/c Dr. 2,000
To Srinivas & Company 2,000
(being 5% commission paid to the
consignee)
Tirupathi consignment a/c Dr. 6,050
To Profit & loss a/c 6,050
(Being the transfer of profit on
consignment to profit and loss a/c)
Bank a/c Dr. 27,050
To Srinivas and Company a/c 27,050
(Being the draft received for settlement()
Goods sent on consignment a/c Dr. 30,000
To Trading a/c 30,000
(Being the goods sent on consignment
transferred to trading a/c)

Ledger Accounts

Dr. Tirupathi Consignment a/c Cr.

Rs. Rs.
To Goods sent on consignment By Srinivas & Company 40,000
a/c 30,000
To Cash a/c 1,000
To Srinivas & Company a/c 950
To Srinivas & Compay a/c 2,000
To Profit and Loss a/c 6,050
40,000 40,000
Accounting - II 5.3

Dr. Srinivas and company a/c Cr.

Rs. Rs.
To Tirupathi consignment a/c 40,000 By Bills receivable a/c 10,000
By Tirupathi consignment 950
a/c
By Tirupathi Consignment 2,000
a/c
By Bank a/c 27,050
40,000 40,000

Dr. Goods sent on Consignment a/c Cr.

Rs. Rs.
To Trading a/c 30,000 By Tirupathi consignment 30,000
a/c
30,000 30,000

Dr. Bills receivable a/c Cr.

Rs. Rs.
To Srinivas & Company a/c 10,000 By Bank a/c 9,900
By Discount a/c 100
10,000 10,000

Journal Entries in the books of Srinivas and Company

Date Particulars L.F. Debit Credit

Rs. Rs.
Rao & Company a/c Dr. 10,000
To Bills payable a/c 10,000
(Being the bill accepted for 3 months
towards advance)
Cash a/c Dr. 40,000
To Rao & Company a/c 40,000
(Being the goods sold on consignment )
Rao and Company a/c Dr. 950
To Cash a/c 950
(Being the expenses paid on
consignment)
Rao & Company a/c Dr. 2,000
To Commission a/c 2,000
(Being commission received)
Rao & Company a/c Dr. 27,050
To Bank a/c 27,050
(Being the settlement of the account with
Rao & Company)
Bills payable a/c Dr. 10,000
To Cash a/c 10,000
(Being the bill honoured on due date)

Dr. Rao and Company a/c Cr.

5.4 Consignment Accounts

Rs. Rs.
To Bills payable a/c 10,000 By Cash a/c 40,000
To Cash a/c 950
To Commission a/c 2,000
To Bank a/c 27,050
40,000 40,000

Dr. Bills payable a/c Cr.

Rs. Rs.
To Cash a/c 10,000 By Rao & Company a/c 10,000
10,000 10,000

Solution – 3 :
Dr. Bombay Consignment a/c Cr.
Rs. Rs.
To Goods sent on consignment 48,000 By Javeri Brothers a/c 61,400
a/c
To Cash a/c 1,600
To Javeri Brothers a/c 1,200
To Javeri Brothers a/c 4,912
To Profit and Loss a/c 5,688
61,400 61,400

Dr. Javeri Brothers a/c Cr.

Rs. Rs.
To Consignment a/c (Sales) 61,400 By Consignment 1,200
(expenses)
By Consignment a/c 4,912
(expenses)
By balance c/d 55,288
61,400 61,400
To Balance b/d 55,288

Dr. Goods sent on Consignment a/c Cr.

Rs. Rs.
To Trading a/c 48,000 By Consignment a/c 48,000
48,000 48,000

Dr. Cash a/c Cr.

Rs. Rs.
To Balance c/d 1,600 By Consignment a/c 1,600
1,600 1,600
By Balance b/d 1,600

Solution – 4 :
Accounting - II 5.5

Dr. Consignment a/c Cr.

Rs. Rs.
To Goods sent on consignment 2,000 By Ashoklal a/c 13,800
a/c
To Bank a/c 270
To Ashok lal a/c (expenses) 2,070
To Ashok lal a/c (Commission) 250
To Profit and Loss a/c 9,210
13,800 13,800

2. Valuation of Unsold Stock :

Solution – 5 :
Journal entries in the books of Gopal (Consignor)

Date Particulars L.F. Debit Credit

Rs. Rs.
Consignment a/c Dr. 10,000
To Goods sent on Consignment a/c 10,000
(Being goods sent on consignment)
Consignment a/c Dr. 2,000
To Cash a/c 2,000
(Being expenses paid)
Consignment a/c Dr. 900
To Krishna a/c 900
(Being expenses paid by consignee)
Krishna a/c Dr. 16,000
To Consignment a/c 16,000
(Being Account sales received)
Consignment a/c Dr. 800
To Krishna a/c 800
(Being commission allowed)
Consignment stock a/c Dr. 3,000
To Consignment a/c 3,000
(Being the valuation of closing stock)
Consignment a/c Dr. 5,300
To Profit and Loss a/c 5,300
(Being the profit on consignment)
Goods sent on consignment a/c Dr. 10,000
To Trading a/c 10,000
(Being the goods sent on consignment
transferred to trading a/c)

Dr. Consignment a/c Cr.

5.6 Consignment Accounts

Rs. Rs.
To Goods sent on consignment 10,000 By Krishna a/c 16,000
a/c
To Cash a/c 2,000 By Consignment stock a/c 3,000
To Krishna a/c 900
To Krishna a/c 800
To Profit and Loss a/c 5,300
19,000 19,000

Dr. Krishna a/c Cr.

Rs. Rs.
To Consignment a/c 16,000 By Consignment a/c 900
By Consignment a/c 800
By Balance c/d 14,300
16,000 16,000
To Balance b/d 14,300

Journal entries in the books of Krishna (Consignee)

Date Particulars L.F. Debit Credit

Rs. Rs.
Gopal a/c Dr. 900
To Cash a/c 900
(Being expenses paid)
Cash a/c Dr. 16,000
To Gopal a/c 16,000
(being goods sold)
Gopal a/c Dr. 800
To Commission a/c 800
(Commission received)

Dr. Gopal a/c Cr.

Rs. Rs.
To Cash a/c 900 By Cash a/c 16,000
To Commission a/c 800
To Balance c/d 14,300
16,000 16,000
By Balance b/d 14,300

Working Notes :

Valuation of Closing Stock : Rs.

Cost of unsold goods 10,000 X ¼ 2,500
Add : Proportionate expenses of consignor 2,000 x ¼ 500
Value of closing stock 3,000

Solution – 6 :
Accounting - II 5.7

Dr. Medak Consignment a/c Cr.

Rs. Rs.
To Goods sent on consignment 50,000 By Manjeera & Co. a/c 75,000
a/c
To Bank (expenses) 1,000 By Stock on consignment 12,750
a/c
To Manjeera & Co. (expenses) 2,000
To Manjeera & Co. 3,750
(Commission)
To Profit & Loss a/c 31,000
87,750 87,750

Dr. Manjeera & Co. a/c Cr.

Rs. Rs.
To Consignment a/c 75,000 By Bills receivable a/c 20,000
By Consignment a/c 2,000
By Consignment a/c 3,750
By Balance c/d 49,250
75,000 75,000
To Balance b/d 49,250

Working Notes :

Valuation of Closing Stock Stock

No.of cases sent on consignment 1,000
Less : Sales 750
Unsold stock 250

Valuation of 250 cases of Closing Stock :

Rs.
Cost of 250 cases at Rs.50 each 12,500
Add : Proportionate expenses of consignor 250
Value of unsold stock 12,750

Solution – 7 :
Dr. Consignment a/c Cr.
Rs. Rs.
To Goods sent on consignment 40,000 By Anand a/c (Sales) 30,000
a/c
To Cash a/c (Expenses) 3,000 By Stock on consignment 21,500
a/c
To Anand a/c (expenses) 1,500
To Anand a/c (Commission) 1,500
To Profit and Loss a/c 5,500
51,500 51,500
5.8 Consignment Accounts

Dr. Anand a/c Cr.

Rs. Rs.
To Consignment a/c 30,000 By Consignment a/c 1,500
By Consignment a/c 1,500
By Bank 27,000
30,000 30,000

Dr. Goods sent on Consignment a/c Cr.

Rs. Rs.
To Trading a/c 40,000 By Consignment a/c 40,000
40,000 40,000

Note : Valuation of Closing Stock :

Rs.
Cost of unsold goods 40,000 X ½ 20,000
Add : Proportionate expenses of consignor 3,000 x ½ 1,500
Value of closing stock 21,500

Solution – 8 :

Dr. Consignment a/c Cr.

Rs. Rs.
To Goods sent on consignment 40,000 By Ramachandra & Co. 50,000
a/c (Sales)
To Cash a/c (expenses) 1,200 By Consignment closing 10,300
stock a/c
To Ramachandran & Co 500
(expenses)
To Ramachandran & Co. 2,500
(Commission)
To Profit & Loss a/c (Profit) 16,100
60,300 60,300

Dr. Ramachandran & Co. a/c Cr.

Rs. Rs.
To Consignment a/c 50,000 By Bank (Advance) 10,000
By Consignment a/c 500
By Consignment a/c 2,500
By Balance c/d 37,000
50,000 50,000
To Balance b/d 37,000
Accounting - II 5.9

Dr. Goods sent on Consignment a/c Cr.

Rs. Rs.
To Trading a/c 40,000 By Consignment a/c 40,000
40,000 40,000

Notes : Valuation of Closing Stock :

Rs.
th
1/4 cost of goods 200 x 200 x ¼ 10,000
Add : Proportionate expenses of consignor 1,200 x ¼ 300
Value of closing stock 10,300

Solution – 9 :
Dr. Consignment a/c Cr.
Rs. Rs.
To Goods sent on consignment 20,000 By Ram Ayyar a/c 24,500
a/c
To Cash (expenses) 1,860 By closing stock 5,515
To Ram Ayyar a/c (expenses) 200
To Ram Ayyar a/c (Commission) 1,715
To Profit & Loss a/c 6,240
30,015 30,015

Dr. Ram Ayyar a/c Cr.

Rs. Rs.
To Consignment a/c 24,500 By Bills receivable a/c 15,000
By Consignment a/c 200
By Consignment a/c 1,715
By Bank 7,585
24,500 24,500

Note : Valuation of Closing Stock :

Rs.
th
1/4 cost of stock Rs.20,000 x ¼ 5,000
Add : (1) Share of Consignor expenses 1,860 x ¼ 465
(2) Share of Consignee expenses 200 x ¼ 50
5,515
5.10 Consignment Accounts

3. Loss of Goods :

Solution – 10 :

Journal entries in the books of Narendra & co. (Consignor)

Date Particulars L.F. Debit Credit

Rs. Rs.
Warangal Consignment a/c Dr. 2,00,000
To Goods sent on Consignment a/c 2,00,000
(Being goods sent on consignment)
Warangal Consignment a/c Dr. 2,000
To cash a/c 2,000
(Being the expenses on consignment)
Bills receivable a/c Dr. 50,000
To Ramesh a/c 50,000
(Being the acceptance received for the
bill)
Ramesh a/c Dr. 2,10,000
To Warangal Consignment a/c 2,10,000
(Being the sale of 700 sets at Rs.300
each_
Warangal Consignment a/c Dr. 12,000
To Ramesh a/c 12,000
(Being the expenses incurred by
consignee)
Warangal Consignment a/c Dr. 10,500
To Ramesh a/c 10,500
(Being the commission due to
consignee)
Profit and Loss a/c Dr. 20,200
To Warangal consignment a/c 20,200
(being the transfer of Abnormal Loss)
Stock on consignment a/c Dr. 42,400
To Warangal Consignment a/c 42,400
(being the valuation of closing stock)
Warangal Consignment a/c Dr. 48,100
To Profit and Loss a/c 48,100
(being the transfer of profit on
consignment)
Bank a/c Dr. 1,37,500
To Ramesh a/c 1,37,500
(Being the receipt of bank draft)
Goods sent on consignment a/c Dr. 2,00,000
To Trading a/c 2,00,000
(Being the goods transferred to trading
account)
Accounting - II 5.11

Dr. Warangal Consignment a/c Cr.

Rs. Rs.
To Goods sent on consignment 2,00,000 By Ramesh a/c 2,10,000
a/c
To Cash a/c 2,000 By Profit and Loss a/c 20,200
To Ramesh a/c (expenses) 12,000 By Stock on consignment 42,400
a/c
To Ramesh a/c (Commission) 10,500
To Profit and Loss a/c 48,100
2,72,600 2,72,600

Dr. Ramesh a/c Cr.

Rs. Rs.
To Warangal Consignment a/c 2,10,000 By Bills receivable a/c 50,000
By Warangal Consignment 12,000
a/c
By Warangal consignment 10,500
a/c (commission)
By Bank a/c 1,37,500
2,10,000 2,10,000

Dr. Good sent on Consignment a/c Cr.

Rs. Rs.
To Trading a/c 2,00,000 By Warangal consignment 2,00,000
a/c
2,00,000 2,00,000

Dr. Stock on Consignment a/c Cr.

Rs. Rs.
To Warangal consignment a/c 42,400 By Balance c/d 42,400
42,400 42,400
To Balance b/d 42,400

Working Notes :

(1) Valuation of Closing Stock Stock

No.of Transister sets sent on consignment 1,000
Less : damaged in transit 100
900
Less : Sale of sets 700
Unsold Transister sets 200

Valuation of 200 sets of Closing Stock :

Rs.
Cost price of 200 cases at Rs.200 each 40,000
Add : Proportionate expenses of consignor 400
Freight 2,000 x 200/1,000
5.12 Consignment Accounts

Add : Consignee proportionate expenses on 200 sets 2,000

Duty Rs.9,000 9,000x 200/900
Cost of Unsold stock 42,400

2. Consignor transport expenses related to 1,000 sets. But consignee received only 900
sets (100 sets totally damaged). Hence, duty will be calculated for 900 sets only.

3. Calculation of Abnormal Loss :

Rs.
Cost price of 100 sets at Rs.200 each 20,000
Add : Proportionate expenses of consignor
Rs.2,000 x 100/1,000 200
Cost of Abnormal Loss 20,200

4. Consignee expenses are not included in the calculation of abnormal loss since they
are incurred after the receipt of the transistors.

Solution – 11 :

Dr. Consignment a/c Cr.

Rs. Rs,
To Goods sent on Consignment 86,250 By Kamal a/c (Sales) 93,500
a/c
To Bank a/c 8,500 By Insurance co. (claim) 4,500
To Kamal (expenses) 1,100 By Profit and Loss a/c 8,133
(Abnormal Loss)
To Kamal (commission) 4,675 By Consignment stock a/c 12,733
To Profit and Loss a/c 18,341
1,18,866 1,18,866

Calculation of Abnormal Loss :

Rs.
Cost price of 20 radios at Rs.575 each 11,500
Add : Proportionate expenses of consignor
8,500 x 20/150 1,133
12,633
Less : Amount received from Insurance co. 4,500
Value of Abnormal Loss 8,133

Calculation of Closing stock :

Rs.
Cost price of 20 radios at Rs.575 each 11,500
Add : Proportionate expenses of consignor
Accounting - II 5.13

(8,500 x 20/150) 1,133

Add : Consignee direct expenses
Rs. 650 x 20/130 100
12,733

Solution – 12 :
Books of Ramakrishna

Dr. Guntakal Consignment a/c Cr.

Rs. Rs,
To Goods sent on Consignment 2,25,000 BY Profit & Loss a/c 15,100
a/c
To Cash a/c (expenses) 1,500 By Gopal Rao (Sales) 2,60,000
To Gopal Rao a/c 1,000 By stock on consignment 15,130
a/c
To Gopal Rao (commission) 13,000
To Profit & Loss a/c 49,730
2,90,230 2,90,230

Dr. Gopala Rao a/c Cr.

Rs. Rs,
To Consignment a/c 2,60,000 By Guntakal Consignment 1,000
a/c
By Guntakal Consignment 13,000
a/c
By Bank a/c 1,00,000
By Balance c/d 1,46,000
2,60,000 2,60,000
To Balance b/d 1,46,000

Dr. Goods sent on Consignment a/c Cr.

Rs. Rs,
To Trading a/c 2,25,000 By Consignment a/c 2,25,000
2,25,000 2,25,000

Notes :

1. Valuation of Unsold stock

No. of Motor cycles sent on consignment 15
Less : Damaged motor cycles in transit 1
14
Less No.of motor cycles sold 13
No.of motor cycles remain unsold 1
2. Calculation of unsold Stock : Rs.
5.14 Consignment Accounts

Cost price of Motor cycle Rs.15,000 x 1 15,000

Add : proportionate expenses :
1. Incurred by consignor
Freight Rs.1,000 + Insurance Rs.500 = Rs.1,500
Rs.1,500 x 1/15 = 100
2. Incurred by consignee
Clearing charges Rs.420 x 1/14 30
Value of unsold stock 15,130

Consignee clearing charges relates to 14 motor cycles only.

2. Calculation of Abnormal Loss Rs.

Cost of damaged motor cycles 15,000.00
Add : Proportionate expenses of consignor
Freight Rs.1,000 x 1/15 66.67
Insurance Rs.500 x 1/15 33.33
Total Abnormal Loss 15,100.00
Less : Amount received from Insurance Co. 10,000.00
Net Abnormal loss to be debited to P & L a/c 5,100.00

4. Consignment of Goods at Invoice Price :

Solution – 13 :
Journal entries in the books of Gopi (Consignor)

Date Particulars L.F. Debit Credit

Rs. Rs.
Consignment a/c Dr. 25,000
To Goods sent on Consignment a/c 25,000
(Being goods sent on consignment)
Consignment a/c Dr. 1,000
To Bank a/c 1,000
(Being expenses incurred)
Bills receivable a/c Dr. 12,500
To Madan a/c 12,500
(Being acceptance received)
Bank a/c Dr. 12,000
Discount a/c 500
To Bills receivable a/c 12,500
(Being the bill discounted)
Consignment a/c Dr. 875
To Madan a/c 875
(Being expenses paid by consignee)
Madan a/c Dr. 26,000
To consignment a/c 26,000
(Being the sale of goods)
Accounting - II 5.15

Consignment a/c Dr. 1,500

To Madan a/c 1,500
(Being commission paid)
Goods sent on consignment a/c Dr. 5,000
To Consignment a/c 5,000
(Being loading on goods sent on
consignment adjusted)
Consignment a/c Dr. 2,625
To Profit and Loss a/c 2,625
(Being profit transferred to profit and loss
a/c)
Bank a/c Dr. 11,125
To Madan a/c 11,125
(Being the draft received from Madan)
Goods sent on consignment a/c Dr. 20,000
To Trading a/c 20,000
(Being goods sent on consignment
transferred to Trading account)

Dr. Consignment a/c Cr.

Rs. Rs,
To Goods sent on Consignment 25,000 By Madan a/c (Sales) 26,000
a/c
To Bank a/c (expenses) 1,000 By Goods sent on 5,000
consignment a/c
To Madan a/c (expenses) 875
To Madan a/c (Commission) 1,500
To Profit and Loss a/c 2,625
31,000 31,000

Dr. Madan a/c Cr.

Rs. Rs,
To consignment a/c 26,000 By Bills receivable a/c 12,500
By Consignment a/c
(expenses) 875
By Consignment a/c
(commission)` 1,500
By Bank a/c 11,125
26,000 26,000

Dr. Goods sent on Consignment a/c Cr.

Rs. Rs,
To Consignment a/c 5,000 By Consignment a/c 25,000
To Trading a/c 20,000
25,000 25,000

Journal entries in the books of Madan (Consignee)

Date Particulars L.F. Debit Credit

5.16 Consignment Accounts

Rs. Rs.
Gopi a/c Dr. 12,500
To Bills payable a/c 12,500
(Being advance sent)
Cash a/c Dr. 26,000
To Gopi a/c 26,000
(Being the sale of goods)
Gopi a/c Dr. 875
To Cash a/c 875
(Being expenses paid on consignment)
Gopi a/c Dr. 1,500
To Commission a/c 1,500
(Being commission received)
Gopi a/c Dr. 11,125
To Bank a/c 11,125
(Being remaining balance sent

Dr. Gopi a/c Cr.

Rs. Rs,
To Bills payable a/c 12,500 By Cash a/c (Sales) 26,000
To Cash a/c (expenses) 875
To Commission a/c 1,500
To Bank a/c 11,125
26,000 26,000

Solution – 14 :
Dr. Vijayawada Consignment a/c Cr.
Rs. Rs,
To Goods sent on Consignment 12,000 By Vijay a/c 25,000
a/c
To Cash (Expenses) 500 By Goods sent on 2,000
consignment a/c
To Vijay (expenses) 500
To Vijay (Commission) 1,250
To Profit & Loss a/c 12,750
27,000 27,000

Dr. Vijay a/c Cr.

Rs. Rs,
To Consignment a/c 25,000 By Consignment a/c 500
By Consignment a/c 1,250
By Cash a/c 23,250
25,000 25,000

Solution – 15 :
Accounting - II 5.17

Dr. Consignment a/c Cr.

Rs. Rs,
To Goods sent on Consignment 10,500 By Nagma a/c (Sales) 15,500
a/c
To Nagma (Expenses) 1,200
To Nagma (Commission) 930
To Profit and Loss a/c 2,870
15,500 15,500

Dr. Nagma a/c Cr.

Rs. Rs,
To Consignment a/c 15,500 By Bank (Advance) 2,000
By consignment a/c 1,200
By Consignment a/c 930
By Balance c/d 11,370
15,500 15,500

Dr. Goods sent on Consignment a/c Cr.

Rs. Rs,
To Trading a/c 10,000 By Consignment a/c 10,000
10,000 10,000

Solution – 16 :
Journal entries in the books of Mohan (Consignor)

Date Particulars L.F. Debit Credit

2000 Rs. Rs.
Jan.1 Consignment a/c Dr. 12,500
To Goods sent on Consignment a/c 12,500
(Being goods sent on consignment)
Goods sent on consignment a/c Dr. 2,500
To Consignment a/c 2,500
(Being loading on goods sent on
consignment adjusted)
Consignment a/c Dr. 400
To Cash a/c 400
(Being expenses incurred)
Jan.8 Bills receivable a/c Dr. 4,000
To Gopal a/c 4,000
(Being acceptance received)
Consignment a/c Dr. 350
To Gopal a/c 350
(Being expenses paid)
Jan.31 Gopal a/c Dr. 10,400
To consignment a/c 10,400
(Being the sale of goods)
Consignment a/c Dr. 600
To Gopal a/c 600
5.18 Consignment Accounts

(Being commission paid)

Consignment stock a/c Dr. 3,225
To Consignment a/c 3,225
(Being the valuation of closing stock)
Consignment a/c Dr. 625
To Consignment stock reserve a/c 625
(Being unloading on closing stock)
Consignment a/c Dr. 1,650
To Profit and Loss a/c 1,659
(Being profit transferred to profit and loss
a/c)
Goods sent on consignment a/c Dr. 10,000
To Trading a/c 10,000
(Being goods sent on consignment
transferred to Trading account)

Dr. Consignment a/c Cr.

Rs. Rs,
To Goods sent on Consignment 12,500 By Goods sent on 2,500
a/c consignment a/c
To Cash a/c (expenses) 400 By Gopal 10,400
To Gopal a/c 350 By Consignment stock a/c 3,225
To Gopal a/c 600
To Consignment stock reserve 625
a/c
To Profit and Loss a/c 1,650
16,125 16,125

Dr. Gopal a/c Cr.

Rs. Rs,
To consignment a/c 10,400 By Bills receivable a/c 4,000
By Consignment a/c 350
By Consignment a/c 600
By Balance c/d 5,450
10,400 10,400
To Balance b/d 5,450

Dr. Goods sent on Consignment a/c Cr.

Rs. Rs,
To Consignment a/c 2,500 By Consignment a/c 12,500
To Trading a/c 10,000
12,500 12,500

1. Calculation of Loading :

Cost of Goods sent on consignment Rs.10,000

Invoice price is 20% of profit on sales
That means invoice price is Rs.100 (80 + 20), then cost price Rs.80
Then total cost price Rs.10,000 x 100/80 = Rs.12,500
Accounting - II 5.19

Then Loading is Rs.12,500 – Rs.10,000 = Rs.2,500

2. Calculation of Loading in unsold stock :

Consignment stock reserve = Rs.2,500 x ¼ = Rs.625

3. Calculation of Unsold stock :

Rs.
Invoice price of Unsold stock Rs.12,500 x ¼ 3,125
Add : Proportionate expenses of consignor Rs.400 x ¼ 100
Add : Proportionate expenses of consignee Nil
Closing stock Value 3,225

Journal entries in the books of Gopal (Consignee)

Date Particulars L.F. Debit Credit

2000 Rs. Rs.
Jan.8 Mohan a/c Dr. 4,000
To Bills payable a/c 4,000
(Being advance sent)
Jan.31 Mohan a/c Dr. 350
To Cash a/c 350
(Being expenses paid)
Cash a/c Dr. 10,400
To Mohan a/c 10,400
(Being sale of goods)
Mohan a/c Dr. 600
To Commission a/c 600
(Being commission received)

Dr. Mohan a/c Cr.

Rs. Rs,
To Bills payable a/c 4,000 By Cash a/c 10,400
To Cash a/c 350
To Commission a/c 600
To Balance c/d 5,450
10,400 10,400
By Balance b/d 5,450

Solution – 17 :
Dr. Consignment a/c Cr.
Rs. Rs,
To Goods sent on Consignment 14,40,000 By Goods sent on 2,40,000
a/c consignment a/c
To Cash a/c 16,000 By Ganesh a/c 13,68,000
To Ganesh a/c 12,000 By Consignment stock a/c 1,45,600
To Ganesh a/c 1,36,800
5.20 Consignment Accounts

To Consignment stock reserve 24,000

a/c
To Profit and Loss a/c 1,24,800
17,53,600 17,53,600

Dr. Ganesh a/c Cr.

Rs. Rs,
To Consignment a/c 13,68,000 By Consignment a/c 12,000
By Consignment a/c 1,36,800
By Bank a/c 12,19,200
13,68,000 13,68,000

Working Notes :

1. Calculation of Loading :

Invoice price of 200 T.V. sets of @ Rs.7,200 is Rs.14,40,000

Invoice price is 20% above cost price
That means if cost price is Rs.100 invoice price is Rs.120 (100 + 20)
Then total cost price is Rs.14,40,000 x 100/120 = Rs.12,00,000
Then loading is Rs.14,40,000 – Rs.12,00,000 = Rs.2,40,000.

2. Loading in unsold stock is Rs.2,40,000 x 10/100 = Rs.24,000

3. Calculation of Unsold Stock :

Rs.
Invoice price of T.V. sets not sold Rs.14,40,000 x 10/100 1,44,000
Add : Proportionate expenses of consignor Rs.16,000 x 10/100 1,600
Add : Proportionate expenses of consignee Nil
Closing stock Value 1,45,600

Solution – 18 :
Books of Prakash

Dr. Tenali Consignment a/c Cr.

Rs. Rs,
To Goods sent on Consignment 24,000 By Ramakrishna (Sales) 21,000
a/c
To Cash a/c 800 By Consignment stock a/c 6,200
To Ramakrishna (expenses) 700 By Goods sent on 4,000
consignment a/c
To Ramakrishna (commission) 1,050
To Stock reserve a/c (loading) 1,000
To Profit and Loss a/c (profit) 3,650
31,200 31,200

Dr. Ramakrishna a/c Cr.

Accounting - II 5.21

Rs. Rs,
To Tenali Consignment a/c 21,000 By Tenali Consignment a/c 700
By Tenali Consignment a/c 1,050
By Cash a/c 19,250
21,000 21,000

Dr. Goods sent on Consignment a/c Cr.

Rs. Rs,
To Tenali consignment a/c 4,000 By Tenali consignment a/c 24,000
To Trading a/c 20,000
24,000 24,000

Notes :

1, Calculation of Closing Stock :

Rs.
¼th unsold stock at invoice price Rs.24,000 x ¼ 6,000
Add : Proportionate expenses of consignor Rs.800 x ¼ 200
6,200

2. Calculation of Loading :

If cost price is Rs.100, profit is Rs.20. Then invoice price is Rs.120.

a. Invoice price of goods sent = Rs.20,000 x 120/100 = Rs.24,000
b. Loading on goods sent = Rs.24,000 – 20,000 = Rs.4,000
c. Loading on unsold stock = Rs.4,000 x ¼ = Rs.1,000

Books of Ramakrishna

Dr. Prakash a/c Cr.

Rs. Rs,
To Cash a/c 700 By Cash a/c 21,000
To Commission a/c 1,050
To Bank a/c 19,250
21,000 21,000

Solution – 19 :
Books of Sastri

Dr. Consignment a/c Cr.

Rs. Rs,
To Goods sent on Consignment 2,800.00 By Sarma (Sales) 1,680.00
a/c (100 x Rs.28) (60 x Rs.28)
To Cash 500.00 By Abnormal Loss a/c 125.00
To Sarma (expenses) 400.00 By Stock on consignment 1,155.00
a/c
To Sarma (Commission) 134.40 By goods sent on 800.00
5.22 Consignment Accounts

consignment a/c
To Stock reserve a/c 280.00 By Profit & Loss a/c (Loss) 354.40
4,114.40 4,114.40

Dr. Sarma a/c Cr.

Rs. Rs,
To Consignment a/c 1,680.00 By Consignment a/c 400.00
By consignment a/c 134.40
By Bills receivable a/c 800.00
By Balance c/d 345.60
1,680.00 1,680.00
To Balance b/d 345.80

Dr. Goods sent on consignment a/c Cr.

Rs. Rs,
To consignment a/c 800 By consignment a/c 2,800
To Trading a/c 2,000
2,800 2,800

Dr. Abnormal Loss a/c Cr.

Rs. Rs,
To Consignment a/c 125 By Profit & Loss a/c 125
125 125

Working Notes :

1. Calculation of Loading :

Assume that, cost price of a dhoti is Rs.100, then invoice price is Rs.140 (100 + 40).
Now, for Rs.20 cost price, invoice price is Rs.20 x 140/100 = Rs.28
Loading = Invoice price – cost price = Rs.2,800 (100 x 28) – 2,000 (100 x 20) =
Rs.800

2. Valuation of Closing Stock :

Total dhoties on consignment 100

Less : Spoiled dhoties 5
95
Less : sold dhoties 60
Remaining unsold dhoties 35
Rs.
Invoice price of 35 dhoties 35 x Rs.28 980
Add : Proportionate expenses Rs.500 x 35/100 175
1,155
3. Consignment Stock Reserve a/c Rs.
Invoice price (35 X Rs.28) 980
Less : Cost price (35 x 20) 700
280
Accounting - II 5.23

4. Calculation of Abnormal Loss

Cost of 5 dhoties 5 x 20 100
Add : proportionate expenses 5 x 500/100 25
125