Chapter 11 Part 2 - Consignment (RR)

Problem 8 - Transactions kept Separate (Perpetual Inventory Method)

1.)
Transactions Consignor's Books - Castro Cura Juice Supplier

Shipment of Goods Inventory on Consignment 60,000.00

Finished Goods Inventory 60,000.00

shipping costs Inventory on Consignment 600.00

paid by Castro Cash 600.00

Finishing cost Inventory on Consignment 2,400.00

paid by Lavadia Consignee Payable 2,400.00

Advances to Cash 3,360.00

Consignor Advances from Consignee 3,360.00

Sales Made by No Entry yet

Consignee

Accounts Sales Consignee Payable 2,400.00

Reported Commission Expense 4,800.00
Advances from Consignee 3,360.00
Cash 37,440.00
Consignment Sales Revenue 48,000.00

Cost of Goods Sold Cost of Goods Sold 31,500.00

Inventory on Consignment 31,500.00

Cost of herbal foods (60,000 x 50%) 30,000.00

Shipping Costs (600 x 50%) 300.00
Finishing Costs (2,400 x 50%) 1,200.00
Total Costs 31,500.00

2.) Lavadia Enterprises

Address
December 31, 20x4

Account Sales for the 60 sachets of herbal foods

Sold for the account and risk of:
Maria Rowena Castro Cura Juice Supplier
Address

Sales (60 sachets of herbal foods) 48,000.00

Charges:
Finishing Costs 2,400.00
Commssion (P48,000 x 10%) 4,800.00 7,200.00
Due to Consignor 40,800.00
Less: Advances 3,360.00
Balance 37,440.00
Remittance Enclosed 37,440.00
Balance Due -

Items on hand (60 sachets of herbal foods): 48,000.00

 Consignee's Books - Lavadia Enterprises

Memorandum entry only to acknowledge

receipt of goods

No entry

Consignor Receivable 2,400.00

Cash 2,400.00

Advances to Consignor 3,360.00

Cash 3,360.00

Cash 48,000.00
Consignor Payable 48,000.00

Consignor Payable 48,000.00

Commission Income 4,800.00
Consignor Receivable 2,400.00
Advances to Consignor 3,360.00
Cash 37,440.00

No Entry
Chapter 11 Part 2 - Consignment (RR)

Problem 9 - Assume 12 units are sold

1.) Me-an Vera Fudge, Inc.

Address
June 30, 20x4

Account Sales for the 12 television sets

Sold for the account and risk of:
Anna Villasanta Coching Co.
Address

Sales 12 television sets @ P24,000

Charges:
Delivery & Installation 14,400.00
Commission (P288,000 x 25%) 72,000.00
Due to Consignor
Less: Advances
Balance
Remittance Enclosed
Balance Due

Items on hand (13 TV sets @ P24,000)

2.) Cost of Inventory on Consignment:

Analysis of Charges: Total Charges Sold - 12

Charges by Consignor:
Cost (25 x P12,000) 300,000.00 144,000.00
Shipment cost 9,000.00 4,320.00
Charges by Consignee:
Delivery and Installation (12 x P1,200) 14,400.00 14,400.00
Commission (P288,000 x 25%) 72,000.00 72,000.00

Total =====> 395,400.00 234,720.00

Consignment Sales 288,000.00

Less: Consignment Costs and Expenses 234,720.00
Consignment Profit 53,280.00
June 30, 20x4

288,000.00

86,400.00
201,600.00
-
201,600.00
201,600.00
-

312,000.00

Unsold - 13

156,000.00
4,680.00

160,680.00
Chapter 11 Part 2 - Consignment (RR)

Problem 10

1.) Cost of Inventory on Consignment:

Analysis of Charges: Total Charges = 80 Sold - 40

Charges by Consignor:
Cost 4,000,000.00 2,000,000.00
Shipment cost 84,000.00 42,000.00
Charges by Consignee:
Advertising Cost 20,000.00 20,000.00
Installation Costs 32,000.00 32,000.00
Commission (P75,000 x 40x 6%) 180,000.00 180,000.00

Total =====> 4,316,000.00 2,274,000.00

2.) Consignment Sales (40 x P75,000) 3,000,000.00

Cost of Consignment Sales & Expenses 2,274,000.00
Consignment Profit 726,000.00

3.) Consignment Sales (40 x P75,000) 3,000,000.00

Less: Consignee's Charges 232,000.00
Cash Remittance 2,768,000.00
Unsold - 40

2,000,000.00
42,000.00

2,042,000.00
Chapter 11 - Consignment Illustration

The following are the transactions between the Cool Trading Corporation of Metro Manila and Jose Lirio of Angeles City.

a) On December 01, 2019, Cool Trading Corporation ships on consignment 10 airconditioning units costing P25,000 to Jose Lirio.
A cash advance of P10,000 per unit is required and sales price is set up at P40,000 per unit with a commission of 10% of sales price.
The consignee is to be reimbursed all expenses related to the consignment with allowance for installation cost to P700 per unit.

b.) The consignor pays the freight and insurance cost of P7,000.

c.) The consignee transferred cash to the consignor's account for the cash advance required.

d. ) Jose Lirio pays for cartage cost of P1,000. He sells 7 units in December and pays for advertisement of P2,000 and installation cost
of P6,000.

e.) On December 31, the consignee returns 2 units of the consigned units and submits his account sales enclosing his check remittance.

Required:
1.) Prepare the Account Sales as submitted by Jose Lirio
2.) Prepare the analysis of charges
3.) Compute for the Consignment Income
4.) Prepare for Journal Entries on the books of the consignor, assuming the use of the perpetual Inventory method
and that (1) consignment income is kept separate and (2) Consignment Income not kept separate.

1.) Jose Lirio

Angeles City
December 31, 2019

Account Sales for the 7 units aircondition

Sold for the account and risk of:
Cool Trading Corporation
Metro Manila

Sales 7 airconditioning units @ P40,000 280,000.00

Charges:
Cartage Cost 1,000.00
 Advertisement 2,000.00
Installation Cost 4,900.00
Commission (P280,000 x 10%) 28,000.00 35,900.00
Due to Consignor 244,100.00
Less: Advances (9 x 10,000) 90,000.00
Balance 154,100.00
Remittance Enclosed 154,100.00
Balance Due -

Returned Units (2 AC @ P40,000) 80,000.00

Items on hand (1 AC @ P40,000) 40,000.00

2.) Analysis of Charges

Total = 10 Sold = 7 Returned = 2 Unsold = 1
Charges by Consignor:
Cost 250,000.00 175,000.00 50,000.00 25,000.00
Freight & Insurance 7,000.00 6,300.00 - 700.00
Charges by Consignee:
Cartage Cost 1,000.00 900.00 - 100.00
Advertising Cost 2,000.00 2,000.00
Installation Costs 4,900.00 4,900.00
Commission (P280,000 x 10%) 28,000.00 28,000.00

Total =====> 292,900.00 217,100.00 50,000.00 25,800.00

3.) Consignment Sales 280,000.00

Cost of Consignment Sales & Expenses 217,100.00
Consignment Profit 62,900.00

4.) Journal Entries

Consignment Income is Kept Separate Consignment Income is not Kept Separate

a.) Inventory on Consignment 250,000.00 Inventory on Consignment
Finished Goods 250,000.00 Finished Goods
b.) Inventory on Consignment 7,000.00 Freight and Insurance
Cash 7,000.00 Cash

c.) Cash 100,000.00 Cash

Advances from Consignee 100,000.00 Advances from Consignee

d.) Inventory on Consignment 1,000.00 Cartage In

Advertising Expense 2,000.00 Advertising Expense
Installation Expense 4,900.00 Installation Expense
Consignee Payable 7,900.00 Consignee Payable

e.) Finished Goods 50,000.00 Finished Goods

Inventory on Consignment 50,000.00 Inventory on Consignment

Cash 154,100.00 Cash

Advances from Consignee 90,000.00 Advances from Consignee
Consignee Payable 7,900.00 Consignee Payable
Commission Expense 28,000.00 Commission Expense
Consignment Sales Revenue 280,000.00 Sales

Cost of Goods Sold 182,200.00 Cost of Goods Sold

Inventory on Consignment 182,200.00 Deferred Consignment Expenses
Freight and Insurance
Cost of Goods Sold 175,000.00 Cartage In
Inventoriable - Freight 6,300.00 Inventory on Consignment
Inventoriable - Cartage 900.00
Total 182,200.00
ot Kept Separate
250,000.00
250,000.00
 7,000.00
7,000.00

100,000.00
100,000.00

1,000.00
2,000.00
4,900.00
7,900.00

50,000.00
50,000.00

154,100.00
90,000.00
7,900.00
28,000.00
280,000.00

182,200.00
800.00
7,000.00
1,000.00
175,000.00