Consignment Account - Entries In The Books of Consignor (Preparation) - SS3 Accounting Lesson Note
Question:
The following transactions were derived from the books of FUMI CO. for the month of August 2022. You are required to prepare entries into the books of consignor in tabular form.
Transactions for FUMI CO.
|
Date |
Transaction |
Amount (₦) |
|
08/01/2022 |
Received consignment of goods |
200,000 |
|
08/05/2022 |
Sold goods from consignment |
50,000 |
|
08/07/2022 |
Sold goods from consignment |
30,000 |
|
08/10/2022 |
Sold goods from consignment |
20,000 |
|
08/12/2022 |
Sold goods from consignment |
25,000 |
|
08/15/2022 |
Returned unsold goods to consignor |
70,000 |
|
08/20/2022 |
Sold goods from consignment |
40,000 |
|
08/25/2022 |
Sold goods from consignment |
35,000 |
|
08/28/2022 |
Sold goods from consignment |
15,000 |
|
08/31/2022 |
Sold goods from consignment |
10,000 |
Answer:
Entries in the Books of Consignor
|
Date |
Transaction |
Debit (₦) |
Credit (₦) |
|
08/01/2022 08/05/2022 08/07/2022 08/10/2022 08/12/2022 08/15/2022 08/20/2022 08/25/2022 08/28/2022 08/31/2022 Total |
Consignment sent to FUMI CO. Cash received from FUMI CO. Cash received from FUMI CO. Cash received from FUMI CO. Cash received from FUMI CO. Goods returned from FUMI CO. Cash received from FUMI CO. Cash received from FUMI CO. Cash received from FUMI CO. Cash received from FUMI CO. |
- 50,000 30,000 20,000 25,000 70,000 40,000 35,000 15,000 10,000 285,000 |
200,000 - - - - - - - - - 200,000 |
Note:
-
In a consignment arrangement, the consignor (seller) sends goods to the consignee (buyer) to sell on their behalf.
-
The consignor records the goods sent to the consignee as inventory in their books until the goods are sold.
-
When the consignee sells the goods, they remit the proceeds (less commission) to the consignor.
-
If any unsold goods are returned by the consignee, they are returned to the consignor, who can then sell them to another buyer or retrieve them as inventory.