CHP 8.

CONSIGNMENT ACCOUNTING

DEFINATIONS
CONSIGNMENT  Consignment refers to a situation where one person (or firm) sends goods to
another person (or firm) on the basis that the goods will be sold on behalf of and
at the risk of the former.
 The ownership of the goods, remains with the consignor or the principal; the agent
or the consignee does not become their owner even though goods are in his
possession.
 The consignee recovers from the consignor all expenses incurred by him on the
consignment.
CONSIGNOR
 He is the person who sends goods to agents e.g., a manufacturer or wholesaler.
(PRINCIPAL)
CONSIGNEE
 The person to whom goods are sent for selling.
(AGENT)
ACCOUNT  This is a periodical statement prepared by consignee to be sent to the consignor
SALES giving details of all sales (cash and credit), expenses incurred and commission due
for sales, goods destroyed-in-transit, or in godown and deducting the amount of
advance remitted by him.
PROFORMA  When the goods are sent by consignor to the consignee, consignor sends a
INVOICE ‘Proforma Invoice’ in the form of an invoice to the consignee.
 ‘Proforma Invoice’ contains information related to the nature of goods, number
and/ or quantity, weights, other measurements related to the goods and marked
price, etc.

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 CHP 8. CONSIGNMENT ACCOUNTING

 It is to be noted that proforma invoice is only in the nature of memorandum invoice

and is not a regular invoice.
 So, it does not make the consignee accountable to pay the amount mentioned
therein.
 Generally, the price shown in such invoice is not the cost price but it is sometimes
the selling price and sometimes the cost price plus an arbitrary percentage of
profit.

CONSIGNMENT SALE
1. Ownership of the goods rests with the consignor The ownership of the goods transfers with the
till the time they are sold by the consignee, no transfer of goods from the seller to the buyer.
matter the goods are transferred to the
consignee.
2. The consignee can return the unsold goods to Goods sold are the property of the buyer and can
the consignor. be returned only if the seller agrees.
3. Consignor bears the loss of goods held with the It is the buyer who will bear the loss if any, after
consignee. the transfer of goods.
4. The relationship between the consignor and the The relationship between the seller and the
consignee is that of a principal and agent. buyer is that of a creditor and a debtor.
5. Expenses done by the consignee to receive the Expenses incurred by the buyer are to be borne
goods and to keep it safely are borne by the by the buyer itself after the transfer of goods.
consignor unless there is any other agreement.

ACCOUNTING ENTRIES
TRANSACTION BOOKS OF CONSIGNOR BOOKS OF CONSIGNEE
Consignment A/c
On sending goods No Entry
To Goods sent on Consignment A/c
Consignment A/c
On expenses for sending goods No Entry
To Cash/ Bank A/c
On advance receipt from Cash/ Bank A/c Consignor A/c
consignee To Consignee A/c To Cash/ Bank A/c
On expenses incurred by Consignment A/c Consignor A/c
Consignee To Consignee A/c To Cash/ Bank A/c
On consignor draws a bill of Bills Receivable A/c Consignor A/c
exchange on consignee To Consignee A/c To Bills Payable A/c
Consignee A/c Cash/ Bank A/c
On consignee reporting sales
To Consignment A/c To Consignor A/c
On goods taken over by Consignee A/c Purchase A/c
consignee To Consignment A/c To Consignor A/c
Consignment A/c Consignor A/c
For commission
To Consignee A/c To Commission A/c
Stock on Consignment A/c
On closing stock No Entry
To Consignment A/c

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 CHP 8. CONSIGNMENT ACCOUNTING
Q1. Ram & Co. of Calcutta consigned 50 cases of goods at ₹200 each to Nathan of Bombay. The consignor
pays ₹200 for insurance and for freight ₹300. Nathan sent an account sale showing the gross proceeds
at ₹24,000. The expenses paid by Nathan were dock dues ₹20, carriage ₹50 warehousing expenses
₹130. He sent the amount due to the consignor after deducting 4% commission.
Prepare necessary ledger accounts in the books of both the parties.

Solution:
In the books of Ram & Co. (Consignor)
Consignment A/c
Particulars ₹ Particulars ₹
To goods send to consignment A/c 10,000 - By Nathan A/c (Sales) 24,000
(50 cases x ₹200)
To Cash A/c 500
(Expenses paid by consignor)
To Nathan A/c 200
(Expenses paid by consignee)
To Nathan A/c (Commission) 960
To P&L A/c (profit on consignment) 12,340
24,000 24,000

Nathan A/c
Particulars ₹ Particulars ₹
To Consignment A/c (sales) 24,000 By Consignment A/c (expenses) 200
By Consignment A/c (commission) 960
By Cash A/c (final settlement) 22,840
24,000 24,000

In the books of Nathan (Consignee)

Ram & Co. A/c
Particulars ₹ Particulars ₹
To Cash A/c (expenses) 200 By Bank A/c (sales) 24,000
To Commission A/c 960
To Bank A/c 22,840
24,000 24,000

Q2. The Bombay Mills Ltd. of Bombay consign to their Calcutta agent ₹10,000 worth of piece goods, drawing
on agent a bill for the amount. They pay charges fright and insurance on the consignment amounting
to ₹650 and discount the bill which costs ₹200. The goods were received in Calcutta and in due course
the account Sales was received as follows:
Account sales of 200 bales of piece goods from Bombay Mills Ltd. of Bombay.
200 bales of piece goods 14,000
Less:
- Delivery Charges 500
- Godown Rent 70

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- Insurance 80
- Sundry Charges 18
- Commission 700
12,632
Draft paid 10,000
Balance herewith 2,632
Enter these particulars in the ledger of the consignor and complete the transaction showing final
profit or the loss on the consignment.

Solution:
In the books of Bombay Mills Ltd.
Consignment A/c
Particulars ₹ Particulars ₹
To goods send to consignment A/c 10,000 - By Agent A/c (Sales) 14,000
(50 cases x ₹200)
To Cash A/c 650
(Expenses paid by consignor)
To Bills Receivable A/c 200
To Agent A/c 668
(Expenses paid by consignee)
To Nathan A/c (Commission) 700
To P&L A/c (profit on consignment) 1,782
14,000 14,000

Agent A/c
Particulars ₹ Particulars ₹
To Consignment A/c 14,000 By Bills Receivable A/c 10,000
By Consignment A/c 1,368
By Bank A/c (final remittance) 2,632
14,000 14,000

Bills Receivable A/c

Particulars ₹ Particulars ₹
To Agent A/c 10,000 By Bank A/c 9,800
By Consignment A/c (discount)* 200
10,000 10,000
*Note: Discount on bill discounted can either be treated as an expense related to consignment and debited
to consignment A/c or as a general business expense and debited to P&L A/c.

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 CHP 8. CONSIGNMENT ACCOUNTING

COMMISSION
MEANING  Commission is the remuneration paid by the consignor to the consignee for
the services rendered to the former for selling the consigned goods.
 Three types of commission can be provided by the consignor to the
consignee, as per the agreement, either simultaneously or in isolation.
ORDINARY  The term commission simply denotes ordinary commission.
COMMISSION  It is based on fixed percentage of the gross sales proceeds made by the
consignee.
 It is given by the consignor regardless of whether the consignee is making
credit sales or not.
 This type of commission does not give any protection to the consignor from
bad debts and is provided on total sales.
DEL-CREDERE  To increase the sale and to encourage the consignee to make credit sales,
COMMISSION the consignor provides an additional commission generally known as del-
credere commission.
 This additional commission when provided to the consignee gives a
protection to the consignor against bad debts.
 In other words, after providing the del- credere commission, bad debts are
no more the loss of the consignor.
 It is calculated on total sales unless there is any agreement between the
consignor and the consignee to provide it on credit sales only.
OVER-RIDING  It is an extra commission allowed by the consignor to the consignee to
COMMISSION promote sales at higher price then specified or to encourage the consignee
to put hard work in introducing new product in the market.
 Depending on the agreement it is calculated on total sales or on the
difference between actual sales and sales at invoice price or any specified
price.
 In order to encourage the consignee to earn higher margins, it can also be
in the form of share of additional profits made by consignee on sale of
goods.

Q3. X sold goods costing ₹ 2,00,000 to Y to be sold at minimum 10% profit on cost. He will be allowed a 5%
general commission on sales and 20% on any excess realized over minimum quoted price. Y sold all the
consignment for ₹ 3,00,000. Calculate total commission payable by Mr. Y.

Solution:

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 CHP 8. CONSIGNMENT ACCOUNTING
General Commission payable: 3,00,000 x 0.05 = ₹ 15,000
Overriding Commission payable: (3,00,000 – 2,20,000) x 0.20 = ₹ 16,000
Total Commission payable = ₹ 31,000

ACCOUNTING IN THE BOOKS OF CONSIGNOR

DEL-CREDERE COMISSION IS DEL-CREDERE COMISSION IS
TRANSACTION
GIVEN NOT GIVEN
Consignee A/c Consignment Debtors A/c
For credit sales
To Consignment A/c To Consignment A/c
Consignment A/c
For bad debts NO ENTRY
To Consignment Debtors A/c
For payment of del-credere Consignment A/c
NO ENTRY
commission To Consignee A/c
By Consignor
Cash A/c
To Consignment Debtors A/c
For realization of cash from
NO ENTRY
debtors
By Consignee
Consignee A/c
To Consignment Debtors A/c

ACCOUNTING IN THE BOOKS OF CONSIGNEE

DEL-CREDERE COMISSION IS DEL-CREDERE COMISSION IS
TRANSACTION
GIVEN NOT GIVEN
Consignment Debtors A/c
For credit sales NO ENTRY
To Consignor A/c
Bad Debts A/c
For Bad Debts NO ENTRY
To Consignment Debtors A/c
For realization of cash from Cash/ Bank A/c Consignor A/c
debtors To Consignment Debtors A/c To Cash/ Bank A/c

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 CHP 8. CONSIGNMENT ACCOUNTING

Commission A/c
For closing bad debts A/c NO ENTRY
To Bad Debts A/c

VALUATION OF CLOSING STOCK

PRINCIPLE  Same as that practised for preparing final accounts.
 Valued at Lower of Cost or Net Realizable Value (LOWER)

CALCULATION OF COST OF UNSOLD STOCK

METHOD 1
Particulars Amount
Purchase Price of closing stock XXX
Proportionate Non-recurring charges incurred by
- Consignor XXX
- Consignee XXX
Value of closing stock XXX

Note:
1) If not specifically mentioned; we assume the expenses incurred by consignor are
non-recurring expenses.
2) If not specifically mentioned; we assume the expenses incurred by consignee are
recurring expenses.
Method 2
(WE WILL USE) Particulars Units Amount
Purchase price of goods sent on consignment XXX XXX
Non-recurring charges incurred by
- Consignor - XXX
- Consignee - XXX
Total value of goods sent on consignment XXX XXX

 Value of Closing Stock: Total Amount x

Q4. A of Sonipat consigned 500 bicycles to B of Cochin to be sold on his account and at his risk. The cost
of one bicycle was ₹200. A paid ₹5,500 as freight and insurance and received ₹40,000 as advance
from B. B paid ₹1,000 as octroi and carriage, ₹1,500 as rent and ₹1,200 as insurance. 410 bicycles
were sold by B for ₹1,10,000. B was entitled to a commission of 5% on sale @₹250 per bicycle and 25%
of any surplus price realized. Give journal entries in the books of A.

Solution:
In the books of A (Consignor)
Journal Entries
Particulars Dr Amt. Cr Amt.
Consignment A/c Dr. 1,00,000
To Goods sent on consignment A/c 1,00,000

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(Being 500 bicycles costing Rs. 200 each consigned to Mr B)

Consignment A/c Dr. 5,500
To Cash/ Bank A/c 5,500
(Being freight and insurance paid by consignor)
Bank A/c Dr. 40,000
To Consignee A/c 40,000
(Being advance given by consignee)
Consignment A/c Dr. 3,700
To Consignee A/c 3,700
(Being octroi, rent and insurance paid by consignee)
Consignee A/c Dr. 1,10,000
To Consignment A/c 1,10,000
(Being 410 bicycles sold for Rs. 1,10,000)
Consignment A/c Dr. 7,000
To Consignee A/c 7,000
(Being general and overriding commission payable to consignee)
Stock on Consignment A/c Dr. 19,170
To Consignment A/c 19,170
(Being stock unsold of goods sent on consignment)
Consignment A/c Dr. 12,970
To Profit & Loss A/c 12,970
(Being profit on consignment transferred to P&L A/c)
Bank A/c Dr. 59,300
To Consignee A/c 59,300
(Being final remittance made for amount due)

Working Note:
1) Computation of value of closing stock:
Particulars Units Amount
Purchase price of goods sent on consignment 500 1,00,000
Non-recurring charges incurred by
- Consignor - 5,500
- Consignee - 1,000
Total value of goods sent on consignment 500 1,06,500
Value of closing stock= 1,06,500 x 90/500 = ₹ 19,170

2) Calculation of Commission:
General Commission= 250 x 410 x 5% = ₹ 5,125
Overriding Commission= (1,10,000 – 1,02,500) x 20% = ₹ 1,875
Total Commission= ₹ 7,000

Q5. Exe sent on 1st July, 2019 to Wye goods costing ₹ 50,000 and spent ₹ 1,000 on packing etc. On 3rd
July, 2019, Wye received the goods and sent his acceptance to Exe for ₹ 30,000 payable at 3 months.

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Wye spent ₹ 2,000 on freight and cartage, ₹ 500 on godown rent and ₹ 300 on insurance. On 31st
December, 2019 he sent his Account Sales (along with the amount due to Exe) showing that 4/5 of the
goods had been sold for ₹ 55,000. Wye is entitled to a commission of 10%. One of the customers turned
insolvent and could not pay ₹ 600 due from him.
Show the necessary journal entries in the consignee’s book.

Solution:
In the books of Wye (Consignee)
Journal Entries
Particulars Dr Amt. Cr Amt.
Exe A/c Dr. 30,000
To Bills Payable A/c 30,000
(Being acceptance sent to X)
Exe A/c Dr. 2,800
To Bank A/c 2,800
(Being expenses paid by the consignee)
Bank/ Trade Receivables A/c Dr. 55,000
To Exe A/c 55,000
(Being sales made by the consignor)
Exe A/c Dr. 600
To Trade Receivables A/c 600
(Being loss due to bad debts borne by the consignor as del-
credere commission is not paid)
Exe A/c Dr. 5,500
To Commission A/c 5,500
(Being 10% commission due on goods sold)
Exe A/c Dr. 16,100
To Bank A/c 16,100
(Being final settlement of account due)
Note: If the commission includes del-credere commission also, he would not be able to debit Exe for
the bad debt. In that case the debit should be to the Commission Earned Account whose net balance
will then be ₹4,900 and he will have to pay ₹16,700 to Exe.

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 CHP 8. CONSIGNMENT ACCOUNTING

NORMAL LOSS ABNORMAL LOSS

Normal loss occurs due to inherent nature of the Abnormal loss occurs mainly because of unforeseen
goods being shipped e.g., leakage, evaporation, events e.g., accident or natural calamity etc.
loss of perishable goods etc.
Normal loss is not accounted for immediately and Abnormal loss is accounted for immediately in
is loaded on the remaining goods. It gets profit and loss account.
accounted for as cost of remaining goods as and
when they are sold.
As normal loss is added to cost of remaining Abnormal loss does not impact gross profit.
goods, it impacts gross profit.
Insurance companies generally do not cover Insurance is generally available for abnormal
normal loss as it is expected to be incurred on losses.
each consignment or storage of goods.
Normal loss is almost certain however it may vary Abnormal loss is because of unforeseen events and
from time to time. is not certain.

NORMAL LOSS
 If some loss is unavoidable, it would be spread over the entire consignment while valuing inventories.
 The total cost-plus expenses incurred should be divided by the quantity available after the normal
loss to ascertain the cost per unit.
 No entry is recorded for normal loss and same is considered as expense which is considered for
valuation of remaining inventory.
 [Ex.] 10,000 kg of apples are consigned to a wholesaler, the cost being ₹ 30 per kg, plus ₹ 40,000 of
freight. It is concluded that a loss of 15% is unavoidable. The cost per kg will be ₹3,40,000/8,500 or
₹ 40. If the unsold inventory is 1,000 kg its value will be ₹ 40,000.

Q6. Mr Lal sent 4,000 kg coconut oil costing Rs. 20 each to Hari, paid freight Rs. 6,000 and loading charges
Rs. 4,000. Hari received the consignment and incurred Rs. 4,000 as recurring and Rs. 6,000 as non-
recurring expenses. He reported a normal loss of 5% and he sold 80% of consignment @ Rs. 50 each.
He was entitled to 2% commission on sale. Prepare Consignment A/c.

Solution:

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 CHP 8. CONSIGNMENT ACCOUNTING
Consignment A/c
Particulars ₹ Particulars ₹
To Goods send to consignment A/c 80,000 By Consignee A/c (Sales) 1,60,000
To Bank A/c 10,000 By Normal Loss A/c (200 units) -
(Expenses paid by consignor)
To Hira A/c By Stock on consignment A/c 15,158
- Recurring 4,000
- Non-Recurring 6,000 10,000
To Hira A/c (Commission) 3,200
To Profit on Consignment A/c 71,958
(Transfer to P&L A/c)
1,75,158 1,75,158

Working Note:
Particulars Units Amount
Purchase price of goods sent on consignment 4,000 80,000
Non-recurring charges incurred by
- Consignor - 10,000
- Consignee - 6,000
Total value of goods sent on consignment 4,000 96,000
Normal Loss 200 -
3,800 96,000
Value of Closing Stock = 96,000 x 600/ 3,800 = 15,158

ABNORMAL LOSS
 If any accidental or unnecessary loss occurs, the proper thing to do is to find out the cost of the
goods thus lost (Same as valuation of closing stock) and then to credit the Consignment Account and
debit the Profit and Loss Account – this will enable the consignor to know what profit would have
been earned had the loss not taken place.
 One should be careful while valuing goods lost in transit and goods lost in consignee’s godown. Both
are abnormal loss but in case of former consignee’s non-recurring expenses are not to be included
whereas it is to be included in latter case.
 Calculation of abnormal loss:
Particulars Units Amount
Purchase price of goods sent on consignment XXX XXX
Non-recurring charges incurred by
- Consignor - XXX
- Consignee - XXX
Total value of goods sent on consignment XXX XXX
Normal Loss (XXX) -
Abnormal Loss (XXX) (XXX)
XXX XXX

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 CHP 8. CONSIGNMENT ACCOUNTING

ACCOUNTING FOR ABNORMAL LOSS

TRANSACTION JOURNAL ENTRY
Abnormal Loss A/c
Abnormal loss incurred
To Consignment A/c
Abnormal loss is recoverable from insurance Insurance Company A/c
company To Abnormal Loss A/c
Bank A/c
Insurance claim received in Bank A/c
To Insurance Company A/c
Consignee A/c
Insurance claim received by consignee
To Insurance Company A/c

Q7. Shri Mehta of Mumbai consigns 1,000 cases of goods costing ₹ 1,000 each to Shri Sundaram of Chennai.
Shri Mehta pays the following expenses in connection with consignment:
Carriage 10,000
Freight 30,000
Loading Charges 10,000
Shri Sundaram sells 700 cases at ₹ 1,400 per case and incurs the following expenses:
Clearing Charges 8,500
Warehouse & Storage 17,000
Packing & Selling Expenses 6,000
It is found that 50 cases have been lost in godown.
Shri Sundaram is entitled to a commission of 10% on gross sales.
Draw up the Consignment Account and Sundaram’s Account in the books of Shri Mehta.

Solution:
Consignment A/c
Particulars ₹ Particulars ₹
To goods send to consignment A/c 10,00,000 By Sunderam A/c (Sales) 9,80,000
To Bank A/c 50,000 By Abnormal Loss A/c (50 units) 52,925
(Expenses paid by consignor)
To Sunderam A/c By Stock on Consignment A/c 2,64,625
- Expenses 31,500
- Commission 98,000 1,29,500
To Profit on Consignment A/c 1,18,050
(Transfer to P&L A/c)
12,97,550 12,97,550

Sunderam A/c
Particulars ₹ Particulars ₹
To Consignment A/c 9,80,000 By Consignment A/c 1,29,500
By Bank A/c (Bal. Figure) 8,50,500
9,80,000 9,80,000

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Working Note:
1) Calculation of value of closing stock.
Particulars Units Amount
Purchase price of goods sent on consignment 1,000 10,00,000
Non-recurring charges incurred by
- Consignor - 50,000
- Consignee - 8,500
Total value of goods sent on consignment 1,000 10,58,500
Abnormal Loss 50 52,925
950 10,05,575
Value of Closing Stock= 10,05,575 x 250/ 950= 2,64,625

Q8. Miss Rakhi consigned 1,000 radio sets costing ₹900 each to Miss Geeta, her agent on 1st July, 2020.
Miss Rakhi incurred the following expenditure on sending the consignment.
Freight ₹ 7,650
Insurance ₹ 3,250
Miss Geeta received the delivery of 950 radio sets. An account sale dated 30th November, 2020
showed that 750 sets were sold for ₹9,00,000 and Miss Geeta incurred ₹10,500 for carriage.
Miss Geeta was entitled to commission 6% on the sales effected by her. She incurred expenses
amounting to ₹2,500 for repairing the damaged radio sets remaining in the inventories.
Miss Rakhi lodged a claim with the insurance company which was admitted at ₹35,000.
Show the Consignment Account and Miss Geeta’s Account in the books of Miss Rakhi.

Solution:
In the books of Miss Rakhi (Consignor)
Consignment A/c
Particulars ₹ Particulars ₹
To Goods send to consignment A/c 9,00,000 By Geeta A/c (Sales) 9,00,000
To Cash A/c 10,900 By Abnormal Loss A/c 45,545
(Expenses paid by consignor) (Gross Abnormal Loss)
To Geeta A/c 13,000 By Closing Stock on consignment A/c 1,84,391
(Expenses paid by consignee)
To Geeta A/c (Commission) 54,000
To P&L A/c (profit on consignment) 1,52,036
11,29,936 11,29,936

Abnormal Loss A/c

Particulars ₹ Particulars ₹
To Consignment A/c 45,545 By Insurance Company A/c 35,000
By P&L A/c (net abnormal loss) 10,545
45,545 45,545

Miss Geeta A/c

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 CHP 8. CONSIGNMENT ACCOUNTING

Particulars ₹ Particulars ₹
To Consignment A/c 9,00,000 By Consignment A/c 67,000
By Bank A/c (Bal. Figure) 8,33,000
9,00,000 9,00,000

Working Notes:
1) Calculation of Abnormal Loss.

Particulars Units Amount

Purchase price of goods sent on consignment 1000 9,00,000
Non-recurring charges incurred by
- Consignor - 10,900
- Consignee* - -
Total value of goods sent on consignment 1,000 9,10,900
Gross Abnormal Loss= 9,10,900 x 50/ 1000= 45,545
Insurance Claim= 35,000
Net Abnormal Loss= 10,545
*Note: As the goods were lost due to abnormal loss while in transit. Carriage paid by the consignee is
not considered while calculating the value of abnormal loss.

2) Valuation of Inventories.

Particulars Units Amount

Purchase price of goods sent on consignment 1000 9,00,000
Non-recurring charges incurred by
- Consignor - 10,900
- Consignee* - 10,500
Total value of goods sent on consignment 1,000 9,21,400
Abnormal Loss 50 45,545
Total value of goods received by consignee 950 8,75,855
Value of Closing Stock= 8,75,855 x 200/ 950= 1,84,391

Q9. Mr. Y consigned 800 packets of toothpaste, each packet containing 100 toothpastes. Cost price of
each packet was ₹ 900. Mr. Y Spent ₹ 100 per packet as cartage, freight, insurance and forwarding
charges. One packet was lost on the way and Mr. Y lodged claim with the insurance company and could
get ₹ 570 as claim on average basis. Consignee took delivery of the rest of the packets and spent ₹
39,950 as other non-recurring expenses and ₹ 22,500 as recurring expenses. He sold 740 packets at
the rate of ₹ 12 per toothpaste. He was entitled to 2% commission on sales plus 1% del-credere
commission.
You are required to prepare Consignment Account. Calculate the cost of inventories at the end,
abnormal loss and profit or loss on consignment.

Solution:
In the books of Mr. Y
Consignment A/c
Particulars ₹ Particulars ₹

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 CHP 8. CONSIGNMENT ACCOUNTING

To goods send to consignment A/c 7,20,000 By Consignee A/c (Sales) 8,88,000

(800 packets x ₹ 900 each)
To Bank A/c 80,000 By Cash A/c (Insurance Claim) 570
To Consignee A/c By P&L A/c (abnormal loss) 430
- Recurring 22,500
- Non-recurring 39,950
- 2% General Commission 17,760
- 1% Del-credere Comm. 8,800
89,010
To Profit & Loss A/c (Profit on consignment) 61,940 By Stock on Consignment A/c 61,950
9,50,950 9,50,950

Working Notes:
1) Calculation of Abnormal Loss and Closing Stock.

Particulars Units Amount

Purchase price of goods sent on consignment 800 7,20,000
Non-recurring charges incurred by Consignor - 80,000
Total value of goods sent on consignment 800 8,00,000
Abnormal Loss (in Transit) 1 1,000
799 7,99,000
Non-recurring charges incurred by Consignee - 39,950
799 8,38,950
Value of Closing Stock = 8,38,950 x 59/ 799= 61,950

If both Normal Loss and Abnormal Loss occur at the same stage & then assume the occurrence to be in
the following order:
1) Normal Loss
2) Abnormal Loss

Q10. Prepare Consignment A/c and Y A/c in the books of X.

X consigned 10,000 litres of oil costing ₹ 20 each to Y, incurring ₹ 5,000 as non-recurring expense.
During transit 10% of the consignment was lost due to fire and insurance company paid ₹ 20,000 to X in
full settlement of claim.
Y received the consignment and incurred ₹ 30,000 as recurring and ₹ 10,000 as non-recurring expense.
He sold 70% of consignment received at 100% profit on cost. He also reported a further loss of 10% due
to fire in godown and 5% due to normal leakage.
He was allowed a commission of 2% on sales. Y used 5 litres of oil for his personal use at an agreed price
of ₹ 35 per litre.

Solution:
In the books of Mr X
Consignment A/c
Particulars ₹ Particulars ₹
To goods send to consignment A/c 2,00,000 By Y A/c (Sales) 2,52,000
(9,000 litre x 70% x ₹ 40)

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To Bank A/c 5,000 By Y A/c (Goods taken over) 175

To Y A/c By Abnormal Loss (P&L) A/c 20,500
- Recurring 30,000 (In transit)
- Non-recurring 10,000
- Commission 5,040 45,040
To Profit & Loss A/c 73,706 By Abnormal Loss (P&L) A/c 20,474
(Profit on consignment) (In godown)
By Stock on Consignment A/c 30,597
3,23,746 3,23,746

Mr Y A/c
Particulars ₹ Particulars ₹
To Consignment A/c 2,52,000 By Consignment A/c 45,040
To Consignment A/c 175 By Bank A/c (Bal. Figure) 2,07,135
2,52,175 2,52,175

Working Notes:
1) Calculation of Abnormal Loss and Closing Stock.

Particulars Units Amount

Purchase price of goods sent on consignment 10,000 2,00,000
Non-recurring charges incurred by Consignor - 5,000
Total value of goods sent on consignment 10,000 2,05,000
Abnormal Loss (in Transit) 1,000 20,500
9,000 1,84,500
Non-recurring charges incurred by Consignee - 10,000
9,000 1,94,500
Normal Loss (in Godown) (5% of 9,000) 450 -
8,550 1,94,500
Abnormal Loss (in Godown) (10% of 9,000) 900 20,474
7,650 1,74,026
Value of Closing Stock = 1,74,026 x 1,345/ 7,650 = 30,597

Note:
1. Unless otherwise specifically mentioned, loss as a % after the goods have reached the consignee
premises will be calculated on quantity received by the consignee.
2. If normal and abnormal loss both occur at the same stage (in transit or consignee premises) normal
loss will be considered first and then abnormal loss.

GOODS INVOICED ABOVE COST

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 CHP 8. CONSIGNMENT ACCOUNTING

 Sometimes, the consignor does not want to reveal actual price of the goods to the consignee so that
he may not know the actual profit or loss being made by him on these goods.
 Therefore, the consignor sends the goods at a price higher than cost price, known as proforma invoice
price.
 The actual selling price may be equal to / different from invoice price.
 If question is silent; assume Actual Selling Price= Invoice Price.
 Thus, consignment account is debited with the invoice price of the goods.
 The profit or loss can be ascertained only if sale proceeds (plus) inventories on hand, valued on cost
basis, is compared with the cost of the goods concerned together with expenses.
 Hence, if entries are first made on invoice basis, the effect of the loading (i.e., amount added to
arrive at the invoice price) must be removed by additional entries in the books of consignor only.
 No change at the time of accounting in the books of Consignee.

Goods Sent on Consignment A/c Dr.

Loading on goods sent on consignment.
To Consignment A/c
Consignment A/c Dr.
Loading on Closing Stock.
To Consignment Stock Reserve A/c

Q11. (Goods invoiced above cost at Invoice Price)

Mr X consigned 100 radio sets to Mr Y valued at ₹ 50,000. This was calculated by adding 25% margin on
cost. Mr X paid ₹ 5,000 as freight & insurance. 20 sets were lost in transit for which Mr X received ₹
5,000 from the insurance company.
Mr Y received the remaining goods in good condition. He incurred ₹ 4,000 for freight and misc. expenses
and ₹ 3,000 for godown rent. He sold 60 sets for ₹ 50,000. Show the necessary ledger account in the
books of Mr X assumed that Mr Y was entitled to ordinary commission @ 10% on sales and 5% del-credere
commission on sales. He also reported that ₹ 1,000 were provided bad.

Solution:
In the books of Mr X (Consignor)
Consignment A/c
Particulars ₹ Particulars ₹
To goods send to consignment A/c (IP) 50,000 By Consignee A/c (Sales) 50,000
To Bank A/c 5,000 To goods send to consignment A/c 10,000
(Loading)

To Consignee A/c By Bank A/c (Insurance Claim) 5,000

- Recurring 3,000
- Non-recurring 4,000
- 10% General Commission 5,000
- 5% Del-credere Comm. 2,500 14,500
By Stock Reserve A/c (Loading) 2,000 By Abnormal Loss (P&L) A/c 4,000
To Profit & Loss A/c (Profit on 9,500 By Stock on Consignment A/c (IP) 12,000
consignment)
81,000 81,000

Mr Y A/c
Particulars ₹ Particulars ₹

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To Consignment A/c 50,000 By Consignment A/c 14,500

By Bank A/c (Bal. Figure) 35,500
50,000 50,000
Working Notes:
1) Calculation of Abnormal Loss and Closing Stock. (at Cost)

Particulars Units Amount

Purchase price of goods sent on consignment 100 40,000
Non-recurring charges incurred by Consignor - 5,000
Total value of goods sent on consignment 100 45,000
Abnormal Loss (in Transit) 20 9,000
80 36,000
Non-recurring charges incurred by Consignee - 4,000
80 40,000
Value of Closing Stock (Cost): 40,000 x 20/80 = 10,000
Loading: 10,000 x 20/100 = 2,000
Value of Closing Stock (IP) = 12,000

Q12. (Goods invoiced above cost at Invoice Price)

Ram of Patna consigns to Shyam of Delhi for sale at invoice price or over. Shyam is entitled to a
commission @ 5% on invoice price and 25% of any surplus price realized. Ram draws on Shyam at 90
days sight for 80% of the invoice price as security money. Shyam remits the balance of proceeds after
sales, deducting his commission by sight draft. Goods consigned by Ram to Shyam costing ₹20,900
including freight and were invoiced at ₹28,400. Sales made by Shyam were ₹26,760 and goods in his
hand unsold at 31st Dec, represented an invoice price of ₹ 6,920. (Original cost including freight
₹5,220). Sight draft received by Ram from Shyam upto 31st Dec was ₹6,280. Others were in- transit.
Prepare necessary any Ledger Accounts.

Solution:
In the books of Ram
Consignment A/c
Particulars ₹ Particulars ₹
To Goods send to consignment A/c 28,400 By goods send to consignment A/c 7,500
(loading)
To Stock Reserve A/c (6,920- 5,220) 1,700 By Shyam A/c (Sales) 26,760
To Shyam A/c (Commission) 2,394 By Closing Stock on consignment A/c 6,920
To P&L A/c (profit on consignment) 8,686
41,180 41,180

Working Notes:
1) Calculation of Commission.

Particulars Amount
Invoice Value of Goods 28,400
(-) Unsold Stock at IP 6,920

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Invoice Price of Goods sold 21,480

Actual Selling Price 26,760
Surplus over Invoice Price 5,280
General Commission (5% of 21,480) 1,074
Overriding Commission (25% of 5,280) 1,320
Total Commission 2,394

Q13. Pass journal entries in the books of Ashok.

Ashok sends goods on consignment basis to Srinivas. The terms are that Srinivas will receive the 10%
commission on Invoice price and 20% on price realized over and above the Invoice price. Srinivas will
meet his expenses himself.
Ashok sent goods whose cost was ₹16,000 at a proforma Invoice price cost plus 25% and spent ₹1,500 on
fright charges. Srinivas accepted a bill for 16,000 immediately on receiving the consignment. His expenses
were ₹200 as rent and ₹100 as insurance. Srinivas sold ¾ of goods for ₹19,500. Part of sales were on
credit and one customer failed to pay ₹400.

Solution:
In the books of Ashok (Consignor)
Journal Entries
Particulars Dr Amt. Cr Amt.
Consignment A/c Dr. 20,000
To Goods sent on consignment A/c 20,000
(Being the invoice value of the goods sent on consignment)
Consignment A/c Dr. 1,500
To Bank A/c 1,500
(Being the expenses incurred on consignment)
Bills Receivable A/c Dr. 16,000
To Srinivas A/c 16,000
(Being the bill drawn as an advance)
Srinivas A/c Dr. 19,500
To Consignment A/c 19,500
(Being the sales made by Srinivas)
Consignment A/c Dr. 2,400
To Consignee A/c 2,400
(Being commission due to consignee)
Consignment Stock A/c Dr. 5,375
To Consignment A/c 5,375
(Being the value of ¼ of the goods left unsold)
Goods Sent on Consignment A/c Dr. 4,000
To Consignment A/c 4,000
(Being the excess of invoice price over cost price in stock
adjusted)
Consignment A/c Dr. 1,000
To Consignment Stock Reserve A/c 1,000
(Being the excess of invoice price over cost price in stock
adjusted)

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Consignment A/c Dr. 400

To Srinivas A/c 400
(Being the bad debts on the credit sale made by Srinivas)
Consignment A/c Dr. 3,575
To Profit & Loss A/c 3,575
(Being the profit on consignment transferred to P&L A/c)
Bank A/c Dr. 700
To Consignee A/c 700
(Being final settlement made of amount due)

Working Notes:
1) Calculation of Commission.

Particulars Amount
Invoice Price of goods sold (20,000 x ¾) 15,000
Actual Selling Price 19,500
Excess realized over Invoice Price 4,500
General Commission (15,000 x 10%) 1,500
Overriding Commission (4,500 x 20%) 900
Total Commission 2,400

2) Valuation of Closing Stock.

Particulars Amount
Invoice price of goods sent on consignment 20,000
Non-recurring Expenses incurred by Consignor 1,500
21,500
Invoice Price of Closing Stock (21,500 x 1/4) 5,375

Q14.
Usha sent goods costing ₹75,50,000 on consignment basis to Gayathri on 1.2.2015 @8.5% commission,
₹8,25,000 was spent on transportation by Usha. Gayathri spent ₹5,25,000 on unloading. 88% of the goods
received were sold for ₹90,00,000, 10% of the goods for ₹10,00,000 and the balance was taken over by
Gayathri @10% below the cost price. She has sent a demand draft to Usha for the amount due show in
Usha’s Books.
1) Consignment Account.
2) Gayathri’s Account.

Solution:
Consignment A/c
Particulars ₹ Particulars ₹
To Goods send to consignment A/c 75,50,000 By Gayatri A/c (Sales) 1,01,35,900
To Bank A/c 8,25,000
To Gayatri A/c
- Unloading 5,25,000

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- Commission (8.5%) 8,61,552 13,86,552

To Profit & Loss A/c (Profit on consignment) 3,74,348
1,01,35,900 1,01,35,900

Gayatri A/c
Particulars ₹ Particulars ₹
To Consignment A/c 1,01,35,900 By Consignment A/c 13,86,552
By Bank A/c (Bal. Figure) 87,49,348
1,01,35,900 1,01,35,900

Working Notes:
1) Computation of sales made by Gayatri.
Particulars Amount
88% of goods received 90,00,000
10% of goods received 10,00,000
2% of goods received taken over 1,35,900
(75,50,000 x 2% x 0.90)
Total Sales 1,01,35,900

1) The owner of consignment stock is:

(a) Consignor (b) Consignee
(c) Debtors (d) None

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2) The consignee is a/an:

(a) Agent (b) Buyer
(c) Bailee (d) Creditor
3) When the Consignor sends goods to consignee, he prepares a ________.
(a) Account Sale (b) Cash Memo
(c) Proforma Invoice (d) Credit Memo
4) A periodic statement furnished by the consignee to consignor is ________.
(a) Proforma Invoice (b) Debit Note
(c) Account Sales (d) None of the above
5) Which of these accounts are not opened in the books of consignor.
(a) Consignment A/c (b) Commission A/c
(c) Goods sent on consignment A/c (d) Consignee Personal A/c
6) If del-credere commission is not allowed then in case of bad debts which account should be
credited in the books of Consignor:
(a) Consignee A/c (b) Profit & Loss A/c
(c) Bad Debts A/c (d) Bank A/c
7) In the Books of Consignor, the Profit of Consignment will be transferred to:
(a) General Trading A/c (b) General P&L A/c
(c) Capital A/c (d) None of the above
8) Closing Stock with consignee is shown in the Balance sheet of ________.
(a) Consignee (b) Consignor
(c) Agency (d) None of the above
9) If consignor drawn a bill on consignee and discounted it with the banker the discounting charges
will be debited in:
(a) General P&L A/c (b) Consignment A/c
(c) Consignee A/c (d) Debtors A/c
10) The unsold stock on consignment is valued at:
(a) Original cost of goods
(b) Original cost-plus non-recurring (direct expenses) incurred by both consignor and consignee
(c) Original cost-plus non-recurring (direct expenses) incurred only by the consignor
(d) Original cost plus all expenses
11) X of Kolkata sends out 100 boxes to Y of Delhi costing Rs 200 each. Consignor’s expenses Rs 4,000.
Consignee’s non-recurring expenses Rs 900 & recurring Rs 500. 1/10th of the boxes was lost in
transit. 2/3rd of the boxes received by consignee were sold. The amount of consignment stock
will be:
(a) Rs 7,200 (b) Rs 7,500
(c) Rs 7,000 (d) Rs 6,000
12) PARIKH & CO. of Nagpur consigned D of Delhi 1000 kgs of Oil @ 13 per Kg. Consignor spent Rs.
750 on cartage, insurance and freight. On the way due to leakage 50 kg. of oil was spoiled (normal
loss). D spent Rs. 500 on Octroi and carriage. His selling expenses were Rs. 400 on 800 kg. of oil
sold. Value of consignment stock will be:
(a) Rs 2,250 (b) Rs 2,000
(c) Rs 2,200 (d) None of the above.
13) X of Kolkata sends out 400 bags to Y on Delhi costing Rs.200 each. Consignor expenses Rs.2,000.
Y expenses non selling Rs.2,000, selling Rs.1,000. 300 bags were sold by Y. Value of consignment
stock will be:
(a) Rs 20,400 (b) Rs 20,200

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(c) Rs 20,000 (d) Rs 21,000

14) A of Ahmedabad consigned goods of Rs. 10,000 to M of Madras and paid Rs. 500 for expenses.
The consignee paid Rs. 100 for freight and Rs. 50 godown rent 80% of goods were sold and
commission of Rs. 500 was paid. Find the value of closing stock.
(a) Rs 2,000 (b) Rs 2,120
(c) Rs 2,100 (d) Rs 2,030
15) Main objective of sending goods at invoice price is to____
(a) Reduce Profit (b) Reduce Income Tax
(c) Keep the real profit a secret (d) None of the above
16) Consignment stock will be recorded in the balance sheet of consignor on asset side at:
(a) Invoice Price less stock reserve (b) Invoice Price
(c) At lower than cost price (d) 10% less than invoice price
17) Stock reserve is credited to adjust ____
(a) Gross Profit
(b) Valuation of closing stock to cost
(c) Valuation of opening stock to cost
(d) 10% less than invoice price
18) Goods sent to consignment at cost + 33 /
. The percentage of loading on invoice price will be:
(a) 25% (b) 33.33%
(c) 20% (d) None of the above
19) X send out of costing Rs. 80,000 to Y of Mumbai so as to show 20% profit on invoice value. 3/5th
of the goods received by consignee is sold at 10% above invoice price. The amount of sale value
will be:
(a) Rs. 66,000 (b) Rs. 60,000
(c) Rs. 50,400 (d) Rs. 52,800
20) Ram of Kolkata sends out goods costing 100,000 to Y of Mumbai at 20% profit on invoice price.
1/10th of the goods was lost in transit. 1/2 of the balance goods were sold. The amount of stock
reserve on consignment stock will be:
(a) Rs. 4,500 (b) Rs. 9,000
(c) Rs. 11,250 (d) None
21) X sends out 500 bags to Y, costing Rs. 400 each at an invoice price of Rs. 450 each. Consignor’s
expenses Rs. 4,000; consignee’s expenses freight Rs. 1000, selling Rs. 2000 .400 bags were sold.
The amount of Consignment Stock reserve will be:
(a) Rs. 5,000 (b) Nil
(c) Rs. 10,000 (d) Rs. 10,200
22) P of Delhi sends out 100 boxes of toothpaste costing Rs.200 each. Each box consists of 12 packets.
60 boxes were sold by consignee at Rs.20 per packet. Amount of sale value will be:
(a) Rs. 14,400 (b) Rs. 12,000
(c) Rs. 13,200 (d) Rs. 14,200
23) Balance in consignment account shows:
(a) Stock lying with consignee
(b) Profit or Loss on consignment
(c) Amount due from consignee
(d) Amount due to consignee
24) Goods sent on consignment Rs. 7,60,000. Opening consignment stock Rs. 48,000. Cash sales Rs.
7,00,000. Consignor’s expenses Rs. 20,000. Consignee’s expenses Rs. 12,000. Commission Rs.
20,000. Closing consignment stock Rs. 3,00,000. The profit on consignment is:

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(a) Rs. 1,50,000 (b) Rs. 1,40,000

(c) Rs. 92,000 (d) Rs. 84,000
25) Mohan consigned 50 cases at Rs. 350 each to B of Varanasi to sell it on consignment basis.
Consignor paid 1,800 for freight and insurance. all the cases were sold for Rs. 28,000. Selling
expenses paid by agent Rs. 900 and their commission to Rs. 1,000. Consignment profit will be:
(a) Rs. 7,000 (b) Rs. 6,800
(c) Rs. 8,000 (d) None of the above
26) Suresh of Delhi consigned 600 fans to Naresh of Agra to be sold at his risk. The cost of each fan
is Rs 300. Suresh paid Rs 6,000 as freight. Naresh paid Rs 1,500 for octroi; Rs 3,500 for godown
rent. 500 fans were sold for Rs 1,80,000. Naresh was entitled to 4% commission on sale @ Rs 350
per fan and 20% of any surplus price realized. Profit on consignment will be:
(a) Rs. 12,250 (b) Rs. 12,000
(c) Rs. 14,000 (d) Rs. 15,000
27) Abnormal loss is valued like:
(a) Normal Loss (b) Stock in hand
(c) Purchase (d) Sales
28) X of Kolkata send out 1,000 bags to Y of Delhi costing Rs. 200 each. Consignor’s expenses Rs.
2,000. Y’s expenses non-selling Rs. 1,000 & selling Rs. 2,000. 100 bags were lost in transit. Value
of lost in transit will be:
(a) Rs. 20,200 (b) Rs. 20,300
(c) Rs. 20,000 (d) Rs. 23,000
29) Mahindra of Madras sent goods to Jaya of Delhi at an invoice price of Rs. 29,675. He paid freight
Rs. 762; cartage Rs. 231 and insurance Rs. 700. On the way one-fourth of the goods was lost by
fire and claim of Rs. 5,000 was recovered from the insurance company. Calculate abnormal loss.
(a) Rs. 5,000 (b) Rs. 7,842
(c) Rs. 7,419 (d) Rs. 2,842
30) If no del credere commission is paid to the consignee ________ account should be debited for
credit sale in the books of consignee.
(a) Consignee A/c (b) Consignment A/c
(c) Consignment Debtors A/c (d) Consignor A/c
31) X of Kolkata sends out certain goods at cost + 25%. Invoice value of goods sends out Rs. 2,00,000.
4/5th of the goods were sold by the consignee at Rs. 1,76,000. Commission 2% upto invoice value
and 10% of any surplus above invoice value. The amount of commission will be:
(a) Rs. 4,800 (b) Rs. 5,200
(c) Rs. 3,200 (d) Rs. 1,600
32) A sends goods to B of Delhi, the goods are to be sold at 125% of cost which is invoice price.
Commission is 10% on sales at Invoice Price and 25% of any surplus realized above IP. 10% of the
goods sent out on consignment, invoice value of which is Rs. 12,500 were destroyed. 75% of the
total consignment is sold by B at Rs. 1,00,000. What will be the commission payable to B?
(a) Rs. 10,937.50 (b) Rs. 16,250
(c) Rs. 10,000 (d) Rs. 9,700
33) Which of the following details are contained in an account sales:
(a) Expenses incurred on behalf of consignor (b) Sales made
(c) Unsold stock left with consignee (d) All of the above
34) Which of the following statement is correct:
(a) Consignee will pass a journal entry in his books at the time of receiving goods from consignor.
(b) Consignee will not pass any journal entry in his books at the time of receiving goods from
consignor.

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(c) The ownership of goods will be transferred to consignee at the time of receiving the goods.
(d) Consignee will treat consignor as creditor at the time of receiving goods.
35) If both normal loss and abnormal loss occur at the same stage. Which of them will be assumed to
have occurred before for calculation purpose:
(a) Normal Loss (b) Abnormal Loss
(b) Both of the above (d) None of the above
Mr. X sent 250 units costing Rs. 10,000 each to Mr. Y. The goods were to be sold so as to yield a
gross profit on 20% on sales. Mr. Y sold 150 units @ Rs. 14,200 per unit on credit and 75 units @
Rs. 14,000 for cash. Calculate the commission due to Mr. Y, if:
36) Mr. Y was entitled to a commission of Rs. 500 per unit.
(a) Rs. 1,12,500 (b) Rs. 75,000
(b) Rs. 37,500 (d) None of the above
37) Mr. Y was entitled to an ordinary commission of 5% and del-credere commission of 2%.
(a) Rs. 1,59,000 (b) Rs. 63,600
(b) Rs. 2,22,600 (d) None of the above
38) Which commission is given by the consignor to protect itself from the bad debts:
(a) Ordinary Commission (b) Del-Credere Commission
(b) Overriding Commission (d) None of these
39) 100 tins of oil at Rs. 130 per tin of 15 Kg. each were sent to Bhavnagar by Ahmedabad to be sold
on consignment. He pays Rs. 625 for expenses. Normal loss is considered to be 5%. Calculate the
value of closing stock if the quantity left in 285 kgs.
(a) Rs. 2,600 (b) Rs. 2,470
(b) Rs. 2,725 (d) None of these
40) Loss of stock is said to be normal when –
(a) It is because of bad packing
(b) It is unavoidable and natural
(c) The stock is destroyed in fire
(d) It is loss by theft
41) Panna Lal sends 100 sewing machines on consignment to Ram Lal. The cost of each machine is Rs.
150. Panna Lal spends Rs. 500 on packing and dispatch. Ram Ji Lal received the consignment and
informed that 90 machine have been sold at 180 each. Expenses paid by Ram Ji Lal are freight
Rs. 500, carriage and octroi Rs. 200. Godown rent Rs. 100 and insurance Rs. 150. Ram Ji Lal
entitled to commission of 7 ½ % on sales. Profit on consignment will be—
(a) Rs. 150 (b) Rs. 155
(b) Rs. 200 (d) Rs. 160
42) Goods of the invoice value of Rs. 1,20,000 sent out to consignee at 20% profit on cost. The
loading amount will be –
(a) Rs. 20,000 (b) Rs. 24,000
(b) Rs. 25,000 (d) None
43) X of Kanpur send out 1000 boxes to Y of Delhi, costing Rs. 200 each. at an invoice price of Rs.
220 each. Goods send out on consignment to be credited in general trading A/c will be:
(a) Rs. 2,20,000 (b) Rs. 2,40,000
(b) Rs. 40,000 (d) Rs. 2,00,000
44) On 1st July Krishnan of Chennai consigned 100 bales of cotton to Dheeraj of Hyderabad (Cost
Prize 7,500) at a proforma invoice price of 25% profit on sales, consignment accounted would be
credited for loading by ---
(a) Rs. 2,000 (b) Rs. 1,500
(b) Rs. 2,500 (d) Rs. 3,300

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45) Goods costing Rs.1,80,000 sent out to consignee to show a profit of 20% on Invoice Price.
Invoice price of the goods will be-
(a) Rs. 2,16,000 (b) Rs. 2,25,000
(b) Rs. 2,10,000 (d) None of the above
46) Stock reserve account is credited, when ___
(a) Reserve is credited for abnormal loss
(b) Goods are invoiced above cost
(c) Some stock is Kept reserved with the consignor
(d) None of these
47) Bharti consigned to Bhawana 1500 Kg. of flour costing 4500.She spent Rs. 307 as forwarding
charges 5% of the consignment was lost in weighting and handling. Bhawana sold 1350 kg of flour
at Rs. 4 kg. Her selling expenses being Rs. 550 and commission at 12 ½ on sales valuation of
closing stock will be—
(a) Rs. 253 (b) Rs. 250
(b) Rs. 350 (d) Rs. 275

48) Consignment stock A/c is a ____

(a) Representative Personal A/c (b) Real A/c
(c) Nominal A/c (d) Personal A/c
49) In Consignment Accounting, consignee account is ________
(a) Real A/c (b) Personal A/c
(c) Nominal A/c (d) None of them
50) In Consignment Accounting, consignment is ________
(a) Real A/c (b) Personal A/c
(c) Nominal A/c (d) None of them

ANSWERS:
1) (a) 8) (b) 15) (c) 22) (a) 29) (d)
2) (a) 9) (b) 16) (a) 23) (b) 30) (c)
3) (c) 10) (b) 17) (b) 24) (b) 31) (a)
4) (c) 11) (b) 18) (a) 25) (b) 32) (a)
5) (b) 12) (a) 19) (a) 26) (a) 33) (d)
6) (a) 13) (d) 20) (c) 27) (b) 34) (b)
7) (b) 14) (b) 21) (a) 28) (a) 35) (a)

CA MOHIT ROHRA 8600888058

 CHP 8. CONSIGNMENT ACCOUNTING

36) (a) 39) (c) 42) (a) 45) (b) 48) (b)
37) (c) 40) (b) 43) (a) 46) (b) 49) (b)
38) (b) 41) (b) 44) (c) 47) (a) 50) (c)

CA MOHIT ROHRA 8600888058