Accounting in the books of Consignor: Cost price

Illustration No 1 :
Bombay Dyeing Ltd. of Mumbai sent 50 pieces shirting to Bunty Stores, Delhi, on consignment basis. The
consignees are entitled to receive 5 per cent commission plus expenses. The cost to Bombay Dyeing Ltd..
is Rs. 35 per piece and spent Rs.250 for packing and forwarding.

Bunty Stores, Delhi, pay the following expenses:

Railway Freight etc. Rs. 100
Godown Rent and Insurance Rs. 50

Bombay Dyeing Ltd. draw on the consignees a draft for Rs. 1,000 which is duly accepted. It is discounted
for Rs. 970 Later. Bunty Stores, Delhi, report that the entire consignment has been sold for Rs. 3,000.

Show journal entries in the books of the consignor & consignee and how important ledger account in the
books of the consignor & consignee.

Illustration No 2 :
On 1st May 2022 Amul of Gujarat consigned 100 cases of Milk Powder to Parag Milk Stores of Mumbai.
The goods were charged at a proforma invoice value of Rs. 10,000 including a profit of Rs.2596 on invoice
price. On the same date the consignor paid Rs. 600 for freight and insurance. On 1st July, the consignees
paid import duty Rs. 1,000, dock dues Rs. 200. On 1st August, they sold 80 cases for Rs. 10,500 and sent
a remittance for the balance due to the consignor after deducting commission at the rate of 5% on gross
sale proceeds. Show the Consignment Account and Parag Milk Stores’s Account in Amul’s Book.

Illustration No 3 :
Varun of Mumbai consigned 100 sewing machines to Sanjay of Goa to be sold on his risk. The cost of one
sewing machine was Rs 150, but the invoice price was Rs 200. Varun paid freight Rs 600 and insurance in
transit Rs 200. Sanjay sent a bank draft to Varun for Rs 10,000 as advance payment and later sent an
Account sales showing that 80 sewing machines were sold at Rs 220 each. Expenses incurred by Sanjay
were: carriage inward Rs 25, Octroi Rs 75, Godown rent Rs 500 and Advertisement Rs 300. Sanjay is
entitled to a commission of 5% on sales. Prepare the necessary ledger accounts in the books of Varun
and Sanjay.

Illustration 4 :
On 1st September, 2022 Mehta of Mumbai dispatches on consignment Raman of Tamil Nadu 60 cases of
woollen goods. The cost of each unit was Rs. 100 per case but the invoice price is at cost + 50 % to be
sold by the latter on the consignor’s account. A commission of 3% payable to Raman upon sales and all
charges are borne by Mehta.

Mehta pays freight and insurance at Kanpur amounting to Rs. 510 and draws upon Raman at 3 months
sight for Rs. 4,500 against dispatch.

Raman sells for cash 10 cases at Rs. 1.80 a case on 1 st October, 2022, 25 cases at Rs. 202.50 a case
on 10th October and 15 cases on 30th October, 2022 at Rs. 195 a case . He forwards an Account sales to
Mehta on 2nd November, 2022 deducting the commission due and charges incurred, such charges
amounting to Rs. 405 for unloading, Cartage, storage, etc. and remits a draft for the balance.

You are required to prepare and to show the transactions would appear in the Consignor’s books and
prepare an Accounts Sales.

Illustration 5 :

A Co. Ltd., manufacturers and dealers in edible oil, consigned to their Bangalore agent, 250 crates of oil
(each crate containing 12 one-kilo sachets) in March, 2012. The consignment was sent at 20% over the
cost price of Rs 120 per kilo. A bill was drawn on the agent for 80% of the value of the consignment
which was met on presentation. Expenses incurred by the company by way of freight and insurance
came to Rs 12,000.
The agent received the consignment by lorry and sold in March 2012, 225 crates @ Rs 180 per kilo. He
found that 125 sachets had got damaged in transit—the manufacturer accepted this as a normal loss—
and these were sold to consumers at Rs 80 per sachet. The insurance company settled the loss claim
for Rs 2,500.

Agent incurred expenses of Rs 5,000 on his own account (unconnected with the liability under the
agreement) and Rs 3,000 on consignor’s account. He is entitled to a commission of 5% on sales
effected. By 15th April, 2012, the agent remitted the balance due to him to the company.

Draw the accounts in the book of A Co. Ltd., to record the above transactions

Illustration 6 :
Vandana Traders of Delhi purchased 10,000 pieces of Sarees @ Rs. 100 per Saree. Out of these Sarees,
6,000 Sarees were sent on consignment to Vastralaya of Jabalpur at the selling price of Rs. 120 per
Saree. The consignors paid Rs. 3,000 for packaging and freight.
Vastralaya sold 5,000 Sarees at Rs. 125 per Saree and incurred Rs. 1,000 for selling expenses and
remitted Rs. 5,00,000 to Delhi on account. They are entitled to a commission of 5% on total sales plus a
further 20% commission on any surplus price realised over Rs. 120 per Saree.
3,000 Sarees were sold at Rs. 110 per Saree.
Owing to fall in market price, the value of the stock of Sarees in hand is to be reduced by 10%.
Prepare the Consignment Account and Trading Account in the books of Vandana Traders and their
account in the books of the agent Messrs Vastralaya of Jabalpur.

Illustration 7 :
Dipesh of Jaipur consigned 100 cases of candles to Mukul of Mumbai at Rs,32 per case, which cost him
Rs. 30 per case. He incurred the following costs packing Rs. 40 carriage Rs. 20 and Railway Freight (paid
in advance) Rs. 40 Some of the cases were damaged in transit and Mukul took delivery of 90 cases only.
He (Mukul) spent Rs. 10 for carriage and Rs. 40 for godown rent and sold consignment at Rs. 35 per case.
He sent the net amount to Dipesh after deducting his expenses and commission at the rate of 5 per cent
on the sale proceeds together with his Account sales. Dipesh also received Rs. 180 from the Railway as
damages. Show Consignment, Mukul’s and Goods sent on Consignment Account as it would appear in
the books of Dipesh. Show Dipesh ( Consignor ) & Commission Account in the books of Mukul.

Illustration 8 :
Punjab Cycle Co. of Ludhiana consigned 100 tricycles to Kanpur Cycle Co. of Kanpur costing Rs 1,500
each, invoiced at Rs 2,000 each. The consignor paid freight Rs 10,000 and insurance in transit Rs 1,500.
During transit, 10 tricycles were totally damaged.

Kanpur Cycle Co. took delivery of remaining tricycles and paid Rs 1,530 for octroi duty. Kanpur Cycle Co.
sent a bank draft to Punjab Cycle Co. for Rs 50,000 as advance and later on sent an account sales
showing that 80 tricycles had been sold @ Rs 2,200 each. Expenses incurred by Kanpur Cycle Co. on
godown rent were Rs 2,000. Kanpur Cycle Co. is entitled to a commission of 5% on invoice price and 25%
on any surplus of sale price over invoice price. Insurance claim was settled at Rs 14,000.

Prepare consignment account, consignee’s account and accidental loss account in the books of the
consignor.

Illustration 9 :
Mr. Divik of Jaipur purchased, 5,000 pieces of sarees at Rs. 500 per saree. Out of these 3,000 sarees
were sent on consignment to Mr. Manoj of Pillani at the selling price of Rs. 600 per saree. The consignor
paid Rs. 30,000 for packing and freight. Mr. Manoj sold 2,500 sarees at Rs. 625 per saree and incurred
Rs. 10,000 for selling expenses and remitted Rs. 5,00,000 to Jaipur on account of Mr. Divik. Mr. Manoj is
entitled to a commission of 5% on total sales plus a further commission at 20% of surplus price realized
over invoice
price.
You are required to prepare Consignment Account in the books of Mr. Divik and Mr. Divik’s account in the
books of agent Mr. Manoj.
Illustration 10 :
Shikha of Delhi consigned to Reema of Mumbai, goods to be sold at invoice price which represents 125%
of cost. Reema is entitled to a commission of 10% on sales at invoice price and 25% of any excess
realised over invoice price.
The expenses on freight and insurance incurred by Shikha were Rs 45,000. The account sales received
by Shikha shows that Reema has effected sales amounting to Rs 4,50,000 in respect of 75% of the
consignment. Her selling expenses to be reimbursed were Rs 36,000. 10% of consignment goods of the
value of Rs 56,250 were destroyed in fire at the Mumbai godown. Reema remitted the balance in favour of
Shika.
You are required to prepare consignment account in the books of Shikha along with the necessary
calculations.

Problem on Invoice price method with stock, abnormal loss & del credere commission.
Illustration 11
On 1st May, 2022, Jainam sent on consignment to Shivam, 10 cases of tea costing Rs. 5,000 each
invoiced proforma at Rs. 6,000 each. Freight and other charges on the consignment amounted to Rs.
3,100.

On 31st July, 2022, Shivam sent an account sales showing that 4 cases had been sold at Rs. 6,000 each
and 3 cases at Rs. 7,000 each while 3 cases remained unsold.
Shivam also informed Jainam that of the three cases remaining in stock, two cases were badly damaged
due to bad packing and that they would be sold at Rs. 3,000 per case (take as NRV).

Shivam was entitled to a commission of 5% on gross sales which included del credere commission.
Shivam could recover Rs. 4,000 only from a customer to whom one case had been sold on credit for Rs.
6,000. Amount of all other sales were duly received.

On 31st July, 2022, Shivam paid the amount due to Jainam by means of a cheque. Prepare the ledger
accounts in the books of Jainam & Shivam.

Problem on Invoice price method with stock, Overriding commission

Illustration 12
D of Delhi appointed A of Agra as its selling agent on the following terms:
(a) Goods to be sold at invoice price or over.
(b) A to be entitled to a commission of 7.5% on the invoice price and 20% of any surplus price realised.
(c) The principals to draw on the agent a 30 days bill for 80% of the invoice price.
On 1st February, 2006, one thousand cycles were consigned to A, each cycle costing Rs. 640 including
freight and invoiced at Rs. 800.

Before 31st March, 2023 (when the principal’s books are closed) A met his acceptance on the due date;
sold off 820 cycles at an average price of Rs. 930 per cycle, the sale expenses being Rs. 12,500; and
remitted the amount due by means of Bank Draft. Twenty of the unsold cycles were shop-soiled and were
to be valued at a depreciation of 50%.

Show by means of ledger accounts how these transactions would be recorded in the books of D, and find
out the value of closing stock with A at which value D will account for the balance stock.

Illustration 13
H. Ltd. forwarded on 1st December, 2011, 50 pressure cookers to Kale of Mumbai to be sold on behalf of
H. Ltd. The cost of one pressure cooker was Rs 1,200 but the invoice price was Rs 1,600. H. Ltd. incurred
Rs 2,000 on freight and insurance. Kale received the consignment on 14th December, 2011 and accepted
a 3 months’ draft drawn upon him by H. Ltd. for Rs 40,000. Kale paid Rs 1,050 as rent and Rs 250 as
insurance and by 31st March had disposed of 40 pressure cookers at Rs 1,640 each. Kale is entitled to a
commission of 5 per cent on sales including a del credere commission of 1%. Kale sold 10 pressure
cookers on credit and was not able to recover sale proceeds of one pressure cooker because of
insolvency of the debtor.

You are required to:

(i) Prepare all the ledger accounts in the books of H Ltd; and
Practice Questions
Illustration No 1
On 15th May, 2022, Bass & Co. of Delhi consigned 100 units of goods, costing Rs.100 per unit, to their
agent Beat & Co. in Mumbai at a proforma invoice of 20% on cost. On the same date, Bass & Co. paid the
following expenses:

Loading charges: Rs.100

Freight: Rs.200
Insurance: Rs.300

Beat & Co. took delivery of goods and, on the same day. On 5th August, sent a bank draft of Rs.5,000 to
Bass & Co. as advance against consignment.

On 5th August, Beat & Co. forwarded an account sales revealing that 85 units were sold @ Rs.140 per
unit. Their expenses in respect of the consignment were as follows:

Unloading charges: Rs.75

Carriage: Rs.25
Godown rent: Rs.60

Beat & Co remitted the entire remaining amount to Bass & Co on August 10.
Beat & Co. was allowed a commission of 10% on gross sale proceeds.
Show the Consignment Account and Beat & Co’s Account in Bass & Co’s Book.

Illustration 2
Amar of Mumbai consigned to Vikas of Delhi, goods to be sold at invoice price which represents 125% of
cost. Vikas is entitled to a commission of 10% on sales at invoice price and 25% of any excess realized
over invoice price.
The expenses on freight and insurance incurred by Amar were Rs10,000.
The account sales received by Amar shows that Vikas has effected sales amounting to Rs 1,00,000 in
respect of 75% of the consignment.
His selling expenses to be reimbursed were Rs 8,000. 10% of consignment goods of the value of Rs
12,500 were destroyed in fire at the Delhi godown. Vikas remitted the balance in favour of Amar.

Prepare consignment account and the account of Vikas in the books of Amar along with the necessary
calculations.

Illustration 3
Nike Sports Co. of New Delhi consigned 100 shoes to Adidas Co. of Ahmedabad costing Rs 1,500 each,
invoiced at Rs 2,000 each. The consignor paid freight Rs 10,000 and insurance in transit Rs 1,500. During
transit, 10 shoes were totally damaged.

Adidas Co took delivery of remaining shoes and paid Rs 1,530 for octroi duty. Adidas co. sent a bank draft
to Nike sports Co. for Rs 50,000 as advance and later on sent an account sales showing that 80 shoes
had been sold @ Rs 2,200 each. Expenses incurred by Adidas Co. on godown rent were Rs 2,000. Adidas
Co. is entitled to a commission of 5% on invoice price and 25% on any surplus of sale price over invoice
price.
Prepare consignment account, consignee’s account and the related working notes account in the books of
the Nike sports Co.

Illustration 4
H Ltd. forwarded on 1st July, 2005. 100 bicycles to Kale of Bombay to be sold on behalf of H. Ltd. The
cost of one bicycles was Rs. 150 but the invoice price was Rs. 200 H. Ltd. incurred Rs. 1,000 on freight
and insurance. Kale received consignment on 14th July, 2005 and accepted a 3 months draft drawn upon
him by H. Ltd. for Rs. 10,000. Kale paid Rs. 400 as rent and Rs. 250 as insurance and by 31st December
had disposed of 80 bicycles at Rs. 205 each.
Kale is entitled to a commission of 5 per cent on sales including del credere commission of 1 %. Kale sold
20 bicycles on credit and was not able to recover sale proceeds of 5 bicycles because of insolvency of the
debtor.

Give Ledger account in the books of H. Ltd. who close their accounts on 31st December.

Illustration 5
X of Delhi Purchased 10,000 meters of cloth for Rs. 2,00,000 of which 5,000 meters were sent on
consignment to Y of Agra at the selling price of Rs. 30 per meter. X paid Rs. 5,000 for freight and Rs. 500
for packing etc.

Y sold 4,000 meters at Rs. 40 per meter and incurred Rs. 2,000 for selling expenses. Y is entitled to a
commission of 5% on total sale proceeds plus a further 20 per cent on any surplus price realized over Rs.
30 per meter.

3,000 meters were sold at Delhi at Rs. 30 per meter less Rs. 3,000 for expenses and commission. Owing
to fall in market price, the stock of cloth in hand is to be reduced by 10 per cent.

Prepare the Consignment Account and Trading and Profit & Loss Account in Books of X and his account
in the books of Y.