UNIT: 1 CONSIGNMENT ACCOUNTS

CONSIGNMENT:
The method of selling goods through an agent in foreign country or in a distance place
of the same country on commission and at the risk of the owner is called consignment
business. In consignment, agent doesn’t buy the goods he just works as mediator.
CONSIGNOR (Principal): The businessman who sends goods to the agent is called a
consignor.
CONSIGNEE (Agent): The person to whom goods are sent by consignor is called consignee.
COMMISSION: The remuneration paid to consignee as % of total sales is called
commission.
DEL-CREDER COMMISSION:
When consignee sold the goods on credit at his own risk to the customer that time, he
receives some extra commission on that credit sales in access to the normal commission, this
extra commission termed as del- credere commission. If any bad debt arises on this credit
sales that will be bears by consignee only.

Entries in the books of consignee:

a. When goods are sent on consignment:

Consignment Ac Dr
To Goods Sent on Consignment
b. When consignor pays expenses:
Consignment Ac Dr
To Cash / Bank Ac
c. When an advance received from consignee:
Bank / Bills Receivables Ac Dr
To Consignee’s Ac
d. When the bill is discounted:
Cash Ac Dr
Discount Ac Dr
To Bills Receivables Ac
e. Sale by consignee:
Consignee’s Ac Dr
To Consignment Ac
f. Expenses paid by the consignee:
Consignment Ac Dr
To Consignee’s Ac
g. Commission payable to consignee:
Consignment Ac Dr
To Consignee’s Ac
h. Amount received from consignee (sales amount):
Cash/ Bank/ Bills Receivables Ac Dr
To Consignee’s Ac
i. Closing stock of consignment:

PRO. JAY PARMAR 1

 Consignment Stock Ac Dr
To Consignment Ac

j. Profit on consignment:
Consignment Ac Dr
To Profit and Loss Ac

k. Closing the goods sent on consignment:

Goods Sent on Consignment Ac Dr
To Trading Ac

Proforma of accounts in the books of consignor:

Consignment account

Particulars Amt. Particulars Amt.

To goods sent on consignment ac - By consignee’s ac (sales)
(goods sent) Cash
To cash ac - Credit (recommendation)
(expenses by consignor) - Credit (consignee) -
To bills receivables ac - By insurance company -
(discount on BR) (claim accepted)
To consignee’s ac - By P&L -
(expenses by consignee) (loss of consignment- claim which
To consignee’s ac (bad debt) - Is not accepted by insurance
To consignee’s ac company) -
(commission to consignee) By goods sent in consignment -
To P&L (if profit) (return)
By consignment stock ac -
(closing stock)
By P&L (if loss)

Goods sent on consignment account

Particulars Amt. Particulars Amt.

To consignment ac (goods return) - By consignment ac (goods sent) -
To trading a/c – transfer -

Consignee’s account

Particulars Amt. Particulars Amt.

To consignment ac (sales) - By cash or B/R ac (advance)
By consignment ac
(consignee’s expense)
By consignment ac (commission)
By consignment ac
Discount allowed
Bad debt
(if del credere is not payable)

PRO. JAY PARMAR 2

 By cash/ bank
(full settlement amt received)

Entries in the books of consignee:

a. When consignee gives advance to consignor:

Consignor’s Ac Dr
To Bank Ac
b. When consignee pays expenses:
Consignor’s Ac Dr
To Cash Ac
c. When goods are sold:
Cash Sales: Cash/Bank Ac Dr
To Consignor’s Ac
Credit Sale: Debtor’s Ac Dr
To Consignor’s Ac
d. Commission due on sales:
Consignor’s ac Dr
To commission ac
e. When the account is settled:
Consignor’s Ac Dr
To Cash/Bank Ac

Proforma of accounts in books of consignee (consignor’s account):

Consignor’s account
Particulars Amt. Particulars Amt.
To bank or B/P ac - By cash or bank ac (cash sales) -
(advance) By debtor’s ac (credit sales) -
To sundry debtors ac - By purchase ac (personal use) -
(sales return)
To cash ac (expenses paid) -
To commission ac -
To bank or B/P ac -
(full settlement)
Valuation of closing stock:
Particulars Units Amt.
Cost of goods (CP or MP whichever is lower) - -
Add: proportionate expenses paid by consignor -
Less: Goods destroyed in transit or Goods not reach to consignee …….(-)…… …….(-)……
Total goods in transit - -
Less: Shortage or normal loss (only units) (-)
Add: proportionate consignee’s non-recurring expenses -
Cost of saleable goods - -
(note: if the cost of goods are taken at market price in case when market price is lower, than the
further calculation is not required and market price will be consider as the cost of saleable goods)
1. Return expenses: Any expenses paid for goods return that must be deduct from the amount of
returned goods and should be also credited to consignee’s account.
2. expenses on closing stock: Any expenses paid for closing stock/remaining stock to put that into
saleable condition that must be deduct from the amount of closing stock and should be also credited

PRO. JAY PARMAR 3

to consignee’s account. But if it’s said that the expenses are estimated only not paid than it should be
deducted from closing stock to ascertain the value of closing stock but that should not be credited to
consignee’s account.
SHORT SUMS

1) 100 Tins of oil at Rs. 530 per tin of 15 kg each were sent by Bhavnagri to Ahmedabadi to be sold on
consignment. He paid 625 for expenses. Normal loss is considered to be 5%. Calculate the value of
stock if quantity left is 285.
Ans:
Total oil sent in kgs: 100*15 kg = 1500 kg

Unit (kg) Amount

Goods sent 1,500 53,000 (100 tin * 530 per tin)
(-) normal loss (5%) (75) - .
Available qty 1,425 53,000
(+) exp. Paid by consignor - 625
Value of available qty 1,425 53,625 (per kg: 53,625/1,425 = 37.632)

So the value of closing stock 285 kg is:

Kg Price
At 1,425 53,625
So at 285 ?

So…….….. 285 * 53,625

1,425

Value of closing stock is : 10,725

2) Gujarat tea company has sent 2,000 kgs. Tea on consignment at Rs. 150 per kg. consignor has paid
expenses of 6,000, consignee has paid octroi and carriages Rs. 2,000. Fire broke out into consignee’s
godown and destroyed 100 kgs. of tea. The insurance company has accepted claim for Rs. 10,000.
Calculate the normal loss and pass journal entry.
Ans.
Calculation of normal loss
Unit (kgs) Amount
Goods destroyed by fire 100 15,000 (100* 150)
(+) prop. Exp of consignor - 300 (100 * 6000/2000)
100 15,300
(+) prop. Exp of consignee
(non-recurring only) - 100 (100 * 2000/2000)
Value of goods destroyed 100 15,400
(- ) claim accepted by [Link]. - (10,000)
Actual abnormal loss 100 5,400

Journal entry

[Link]. Ac Dr 10,000
P&L Ac Dr 5,400
To consignment Ac 15,400

3) Anand consigned 10,000 litres chemicals to Ramesh at the rate of Rs. 1.90 per litre. While sending
the goods, expenses incurred were Rs. 1,000. There was a shortage of 500 litres of chemicals due to
natural causes. Ramesh sold 5,700 litres of chemicals at the rate of 2.85 per litre. He is entitled to get
5% commission. Calculate the value of closing stock and commission.
PRO. JAY PARMAR 4
Ans.
Calculation for Value of closing stock

Unit Amount
Cost of goods 10,000 19,000
+ exp by consignor - 1,000
10,000 20,000
- Normal loss (500) -
Value of stock 9,500 20,000

So the closing stock is 3,800 units (10,000 – 500 – 5700 = 3800)

Value of closing stock is : 3800 * 20,000 / 9500 = Rs. 8,000

Calculation of commission

Total sales by Ramesh : 5,700 * 2.85 = 16,245

Commission is 5% of total sales

So… 16,245 * 5%
Commission = Rs. 812.25

4) Consignor drew a three moths bill on 10-10-2010 which was discounted in a bank at Rs. 19,965
discounts. The rate of discount is 11% p.a. pass journal entry in the books of consignor.
Ans.
Cash ac Dr 7,06,035
Discount ac Dr 19,965
To B/R ac 7,26,000

WN:
Suppose value of B/R is x:
Discount = B/R * rate of discount * month
19,965 = x * 11% * 3/12
x = 7,26,000

So ……. B/R: 7,26,000

Less disc : (19,965)
Cash: 7,06,035

5) Consignor draws on consignee a three months bill on 1-1-12, which was discounted in bank at Rs.
24,300 discounts. Rate of discount is 0.90% per month. Pass journal entry in books of consignor.
Ans.
Cash ac Dr 8,75,700
Discount ac Dr 24,300
To B/R ac 9,00,000

WN:
Suppose value of B/R is x:
Discount = B/R * rate of discount * month
24,300 = x * 0.9% * 3

PRO. JAY PARMAR 5

 x = 9,00,000

6) Find out the value of closing stock of consignment from the following information:
Chemical sent on consignment 2,000 litres Rs. 4,50,000
Expenses paid by consignor Rs. 10,000
Freight and duty paid by consignee Rs. 4,000
Chemical destroyed in godown 400 litres.
Amount paid by insurance company Rs. 90,000
Loss due to natural cause 50 litres
Chemical sold by consignee 1,350 litres.
Ans.
Unit (kg) Amount
Goods sent 2,000 4,50,000
(+) exp. Paid by consignor - 10,000
(+) exp. Paid by consignee - 4,000
2,000 4,64,000
(-) destroyed in godown (400) (92,800) [400*4,64,000 / 2,000]
1,600 3,71,200
(-) Normal loss 50 - -
Value of available qty 1,550 3,71,200 (per ltr: 3,71,200/1,550 = 239.48)

So the value of closing stock 285 kg is:

Kg Price
At 1,550 3,71,200
So at 200 ?

So…….….. 200 * 3,71,200

1,550

Value of closing stock is : 47,897

Long sums

Q 39) On 1-1-2015, Julelal of Jalandhar sent 300 TV sets at invoice price of Rs. 15,000 (cost price per
unit Rs. 12,000) for consignment sale to Ramlal of Rajkot. He paid the expenses as under:
Insurance premium Rs. 3,000, Freight Rs. 24,000 and Carriage Rs. 6,000.
On 1-1-2015 Julelal drawn a bill on Ramlal for Rs. 6,00,000 having a maturity period of three
months, which was accepted by Ramlal and returned. On 4-2-2015 Julelal discounted this bill at 12%.
Ramlal is entitled to get 5% commission and 2% del credere commission.
On 30-6-2015, Ramlal sent account sale and a draft for outstanding amount. The following
details are available from account sale:
I. Ramlal paid Rs. 15,000 for carriage, Rs. 45,000 for insurance premium and Rs. 50,400 for
advertisement.
II. 6 TV sets were destroyed because of the fire in godown of Ramlal. Insurance company
sanctioned and paid a claim of Rs. 60,000.
III. 60 TV sets were sold at Rs. 15,000 each on cash basis. 180 TV sets were sold at Rs. 18,000
each to Ramesh on credit and 30 TV sets were sold at Rs. 17,000 each to Kamal on
recommendation and at risk of Julelal.
IV. Ramesh failed to pay Rs. 60,000. Kamal was declared insolvent and 50 paise per rupee was
received as dividend from him.
Prepare:

PRO. JAY PARMAR 6

 1) Consignment account
2) Ramlal’s account

Ans.
Consignment account
Particular Amount Particular Amount
To goods sent on consignment 45,00,000 By difference in goods sent 9,00,000
(300*15,000) (300*3,000)
To cash ac (consignor’s exp) By insurance com. (claim) 60,000
Insurance pre. 3,000 By loss on goods destroyed 13,860
Freight 24,000 (WN:1)
Carriage 6,000 33,000 By sales:
To discount (B/R discounted) 12,000 Cash (60*15,000) 9,00,000
(6,00,000*12%*2/12) Credit (180*18,000) 32,40,000
To difference in closing stock 72,000 Reco. (30*17,000) 5,10,000 46,50,000
(24*3,000)
To Ramlal’s ac (exp) By closing stock:
Carriage 15,000 Cost(IP) (24*15,000) 3,60,000
Insurance pre. 45,000 + prop. Exp. by
Advertisement 50,400 1,10,400 Consignor:
To bad debt 2,55,000 (24*33,000/300) 2,640
(5,10,000*0.5 paise) + prop. Exp. by
To Ramlal’s ac Commission Consignee(non-recu.):
Gen 2,32,500 (24*60,000/300) 4,800 3,67,440
(46,50,000 * 5%)
Del cred. 64,800 2,97,300
(32,40,000 * 2%)
To P&L ac (profit) 7,11,600
59,91,300 59,91,300

Ramlal’s account
Particular Amount Particular Amount
To sales: By B/R ac (advance) 6,00,000
Cash (60*15,000) 9,00,000 By consignment (exp)
Credit (180*18,000) 32,40,000 Carriage 15,000
Reco. (30*17,000) 5,10,000 46,50,000 Insurance pre. 45,000
Advertisement 50,400 1,10,400
By consignment ac (commission)
Gen 2,32,500
Del cred. 64,800 2,97,300
By consignment (bad debts) 2,55,000
By bank ac- Draft 33,87,300

59,91,300 59,91,300

WN:1 Calculation for abnormal loss

Cost of destroyed unit (CP) 72,000 (6*12,000)
+ prop. Exp. Of consignor 660 (6*33,000/300)
+ prop. Exp. Of consignee 1,200 (6*60,000/300)
Total loss 73,860
- Insurance claim (60,000) (Consigment ac CREDIT)
Actual loss 13,860 (Consigment ac CREDIT)

PRO. JAY PARMAR 7

Q 40) From the following information prepare consignment account and consignee’s account
in the books of consigner Jaitra for the year ending on 30-6-2015:
1) Jaitra of Bilimora consigned goods to Bhavya of Bharuch at an invoice price on 1-7-
2014. The proforma invoice price was made out at a figure so as to show profit of 20%
on invoice price.
2) While sending goods Jaitra paid Rs. 5,000 for freight and insurance.
3) On 1-7-2014 Jaitra drew a bill of 3 months for Rs. 3,00,000 on Bhavya, which was
immediately returned by the later duly accepted. On 4-8-2014 Jaitra discounted that bill
in the bank at the rate of 10% p.a.
4) Invoice price of goods fully destroyed in transit was Rs. 62,500 of which insurance
company accepted a claim of Rs. 45,000.
5) Bhavya paid expenses of Rs. 2,500 for landing, Rs/ 1,500 for advertisement, Rs. 2,250
for transport and Rs. 3,000 for selling expenses.
6) Invoice price of unsold stock lying with Bhavya at the end of the year Rs. 1,50,000.
7) Bhavya returned unsaleable goods worth Rs. 37,500 invoice price and paid Rs. 2,500
for return expenses.
8) Bhavya is entitled to get 5% general commission and 1% del credere commission. He
was paid 10% (after charging his commission and profit sharing) of net profit. Rs.
62,500 general commission was payable to bhavya. The proportion of cash sale and
credit sale is 1:3.
9) Out of credit sale. Rs. 50,000 was made to a customer on the recommendation of Jaitra,
who was declared insolvent and 80% of amount was recovered from him.
10) All goods were sold by bhavya at profit of 25% on invoice price.
Ans. Consignment account
Particular Amount Particular Amount
To goods sent on consignment 12,50,000 By difference in goods sent 2,50,000
To cash ac (consignor’s exp) By insurance com. (claim) 45,000
Freight 5,000 By loss on goods destroyed 5,250
(WN:1)
To discount (B/R discounted) By sales:
(3,00,000*11%*2/12) 5,000 Cash
To difference in closing stock 30,000 Credit
To Bhavya’s ac (exp) Reco. 12,50,000
Landing 2,500 By goods return 37,500 35,000
Advertisement 1,500 - Return expense 2,500
Transport 2,250 By closing stock:
Selling 3,000 9,250 Cost(IP) 1,50,000
To diff. in goods 7,500 + prop. Exp. by
To bad debt 10,000 Consignor: 600
(50,000*20%) + prop. Exp. by 1,51,200
To Bhavya’s ac Commission Consignee(non-recu.): 600
Gen 62,500
Del cred. 8,875 71,375
To Bhavya’s ac (profit) 31,666
(3,48,325*1/11)

PRO. JAY PARMAR 8

 To P&L ac (profit) 3,16,659
17,36,450 17,36,450

Consignee’s account
Particular Amount Particular Amount
To consignment ac sales 12,50,000 By consignment (exp) 9,250
By consignment (bills) 3,00,000
By consignment (commission) 71,375
By consignment (bed debts) 10,000
By consignment (profit share) 31,666
By consignment (return) 2,500
By bank draft (?) 8,25,209
2,74,500 2,74,500

WN:1 Abnormal loss

Cost of loss 50,000 (62,500*80/100)
+ prop. Exp of consignor 250 (50,000*5000/10,00,000)
Total loss 52,500
- Insurance company (45,000)
Actual loss 5,250

WN:2 Calculation of goods sent on consignment

Commission paid is 62,500 which is 5% of total sales
So total sales are 62,500*100/5 = 12,50,000
All sales are made with profit of 25% on invoice price
So invoice price of sales are 12,50,000 * 100/125 = 10,00,000 (IP of sales)

Total goods sent are as follows: (all on invoice price)

Sales : 10,00,000
Goods return : 37,500
Destroyed : 62,500
Closing stock : 1,50,000
Goods sent 12,50,000 (IP)

WN:3 cost price of goods sent

All goods are sent to consignment by adding 20% profit on invoice price
12,50,000*80/100 = 10,00,000 (cost price)

WN:4 calculation of closing stock

Cost of closing stock 1,50,000
+ prop. Exp by consignor 600 (1,50,000*5,000 / 12,50,000)
+ prop. Exp by consignee 600 (1,50,000* 4,750 / 11,87,500)
1,51,200

Q 36) Amar of Ahmedabad consigned 63 mobiles to Suraj of Surat on 1-1-2014 at invoice price of
Rs. 93,750 per mobile. The invoice price was fixed after adding 25% profit on cost price.
Amar paid Rs. 6,804 for carriage, Rs. 19,278 for freight and 5,670 for insurance while sending
the goods. On 1-1-2014 Amar drew a bill of Rs. 18,00,000 for three months on Suraj which was
immediately returned by the later duly accepted. Amar discounted that bill in bank on 1-2-2014 at the
rate of 11% discount per annum.
9 mobiles were damaged in accident in transit, insurance company accepted a claim of Rs.
3,70,000 and Suraj sold these damaged mobiles for cash for Rs. 3,09,536.

PRO. JAY PARMAR 9

 Suraj is entitled to get commission of 5% on invoice price of goods sold (5% on damaged
mobile sold) and 10% on surplus of sales price over the invoice price, and 2% del creder commission
on credit sales.
On 31-12-2014 Suraj sent an account sale and bank draft for the amount due from him. He
reported in account sale that-
1) He paid Rs. 27,216 for octroi, rs. 11,178 for godown rent and Rs. 99,000 for advertisement.
2) He sold 36 mobiles for cash at Rs. 1,26,000 each. 10 mobiles were sold on credit at Rs. 1,33,000
each, in which 3 mobiles were sold to Taral as per Amar’s recommendation.
3) Repairing expenses of Rs. 3600 paid by Suraj to retain balance mobile in saleable condition.
4) Taral was declared insolvent, only 80% amount was recovered from him.
From the above particular prepare consignment account in the books of Amar and pass journal
entry for the amount paid by Suraj.

Ans. Consignment account

Particular Amount Particular Amount
To goods sent on consignment 59,06,250 By difference in goods sent 11,81,250
(63*93,750) (63*18,750)
To cash ac (consignor’s exp) By insurance com. (claim) 3,70,000
Carriage . 6,804 By damaged goods sold 3,09,536
Freight 19,278 By sales:
Insurance 5,670 31,752 Cash 45,36,000
To discount (B/R discounted) 33,000 Credit 9,31,000
(18,00,000*11%*2/12) Reco. 3,99,000 58,66,000
To difference in closing stock 1,50,000
(8*18,750) By closing stock:
To suraj’s ac (exp) Cost(IP) (8*93,750) 7,50,000
Octroi 27,216 + prop. Exp. by
Godown rent 11,178 Consignor:
Advertisement 99,000 1,37,394 (8*31,752/63) 4,032
To bad debt 79,800 + prop. Exp. by
(3,99,000*20%) Consignee(non-recu.):
To suraj (repair exp) 3,600 (8*27,216/54) 4,032 7,58,064
To Ramlal’s ac Commission
Gen 2,31,102
Del cred. 18,620
Surplus 1,55,350 4,05,072

To P&L ac (profit) 17,37,982

84,84,850 84,84,850

Journal entry:
Bank ac Dr 37,49,670
To Suraj’s ac 37,49,670
Suraj’s account (to find out amount paid by Suraj)

Particular Amount Particular Amount

To consignment ac sales 58,66,000 By consignment (exp) 1,37,394
To sales (damaged) 3,09,536 By consignment (bills) 18,00,000
By consignment (commission) 4,05,072
By consignment (bed debts) 79,800
By consignment (repair exp) 3,600
By bank draft (?) 37,49,670

PRO. JAY PARMAR 10

 61,75,536 61,75,536

WN:1 Commission
Type of Amount of sales Invoice price of sales (2) Surplus on sales (1-2)
sales (1)
Damaged 3,09,536 - Damaged
goods
commission
3,09,536*5%
= 15,477
Cash 36 * 1,26,000 = 36 * 93,750 = 33,75,000 11,61,000
45,36,000
Credit 7 * 1,33,000 = 7*93,750 = 6,56,250 2,74,750 Del credere
9,31,000 commission:
9,31,000 *2%
= 18,620
Recommend. 3 * 1,33,000 = 3*93,750 = 2,81,250 1,17,750
3,99,000
Gen commission on IP 10% commission on
=
surplus =
43,12,500*5%=
2,15,625 15,53,500* 10% =
1,55,350

Q 27) Shri Sneh started consignment business of sending bicycles on consignment to Jeet from 1-1-
2014. From the information given below prepare consignment account:
Particulars 2014 2015
No. of bicycles sent on consignment 40 60
Cost price per bicycle Rs. 500 Rs. 600
Expenses paid by consignor Rs. 1,000 Rs. 1,500
Advertisement expenses paid by consignee Rs. 2,000 Rs. 3,000
No of bicycles sold 35 50
Invoice price per bicycle Rs. 600 Rs. 750
Sales price Rs. 800 Rs. 800
Rate of commission is 5% on invoice price of bicycles sold.

Ans.
Consignment ac for the year 2014
Particulars Amt Particulars Amt
To goods sent on cons. 24,000 By diff. in goods sent 4,000
(40*600) (40*100)
To cash ac (exp by consignor) 1,000 By Jeet (sales) 28,000
To Jeet (exp) 2,000 (35*800)
To diff. in closing stock 500 By closing stock
(5*100) Value:(5*600): 3,000
To Jeet (commission)(5% on IP) 1,050 + prop. Exp by
[(35*600)*5%] Consignor
To P&L (profit) 6,575 (1,000*5/40): 125 3,125
35,125 35,125

PRO. JAY PARMAR 11

 Consignment ac for the year 2015
Particulars Amt Particulars Amt
To opening stock 3,125 By diff. in opening stock 500
To goods sent on cons. 45,000 (5*100)
(60*750) By diff. in goods sent 9,000
To cash ac (exp by consignor) 1,500 (60*150)
To Jeet (exp) 3,000 By Jeet (sales) 40,000
To diff. in closing stock 2,250 (50*800)
(15*150) By closing stock
To Jeet (commission)(5% on IP) 1,837.5 Value:(15*750): 11,250
[(5*600)+(45*750)]*5% + prop. Exp by
To P&L (profit) 4,412.5 Consignor
(1,500*15/60): 375 11,625
61,125 61,125

Q: 17 Shahid of Mumbai consigned goods to Saif of Delhi at an invoice price of Rs. 2,70,000
on 1-4-2015, including freight and insurance of Rs. 20,000. The invoice price is fixed after
adding 25% profit on cost price.
On 1-4-2015 shahid drew a bill of Rs. 1,00,000 for five months on Saif, which was
immediately returned by the later, duly accepted. Shahid discounted the bills with a bank on 1-
6-2015 at 12% discount per annum.
Saif entitled to get 10% general commission and 5% del credere commission. In
addition to this he is also to be given 10% of net profit as a share in profit. Saif was allowed
Rs.12,000 per annum towards establishment expenses.
On 31-12 2015 Saif sent an account sale and bank draft for the amount due from him.
He reported in the account sale that:
1) He paid Rs.10,000 for octroi and Rs. 5,600 for selling expenses.
2) He returned 5% unsaleable goods and paid 1,000 for return purpose.
3) 50% of goods were sold for cash at 25% profit on invoice price.
4) 20% goods were sold on credit to Akshay at 30% profit on invoice price.
5) 10% of goods were sold to Aamir as per Shahid’s recommendation at 40% profit on
invoice price.
6) 5% goods were purchased by him for personal use at invoice price.
7) 5% goods were damaged in the godown due to fire, against it, insurance company
accepted a claim of 70%. These damaged goods were sold to Salman for cash at 50%
discount on cost price.
8) After paying 80% amount both customers were declared insolvent and 80% could be
recovered from their estate.
9) Repairing expenses of Rs. 1,050 is estimated for remaining goods to make them
saleable.
from above particulars prepare consignment account and Saif’s account in books of Shahid.

PRO. JAY PARMAR 12

Ans: Consignment account

Particular Amount Particular Amount

To goods sent consignment (IP) 2,50,000 By diff. in goods sent 50,000
To cash (exp by shahid) 20,000 By goods return (IP) 12,500
To bills discount 3,000 - Return exp 1,000 11,500
(1,00,000*3/12*12/100) By Saif (sales)
To Saif (establishment exp) 9,000 Cash 1,56,250
(12,000*9/12) Credit 65,000
To Saif (expenses) Rec. 35,000
Octroi 10,000 Personal 12,500
Selling exp. 5,600 15,600 Damage sold 5,750 2,74,500
To diff. in goods return 2,500 By insurance company 8,050
(12,500*25/125) By closing stock (IP)
To abnormal gain on good des. 2,300 Stock 12,500
To Saif (bed debts) 1,400 + prop. Exp shahid 1,000
To diff. in closing stock 2,500 (20,000*12,500/2,50,000)
To Saif (commission) + prop. Exp. Saif 500
Gen 27,450 (10,000*12,500/2,50,000)14,000
Del (65,000*5%) 3,250 30,700 - Repairing (saif) 1,050 12,950
To saif (profit) (17,000*10%) 2,000
To P&L (profit) 18,000
3,57,000

Saif’s account
Particular Amount Particular Amount
To consignment ac sales 2,74,500 By consignment (establisment) 9,000
By consignment (exp) 15,600
By consignment (bills) 1,00,000
By consignment (commission) 30,700
By consignment (bed debts) 1,400
By consignment (return) 1,000
By consignment (profit share) 2,000
By bank draft (?) 1,14,800
2,74,500 2,74,500
WN:1 Abnormal loss (CP)
Cost of loss 10,000 (12,500*25/125)
+ prop. Exp of consignor 1,000 (20,000*10,000/2,00,000)
Total loss 11,000
+ prop. Exp of consignee 500 (10,000*10,000/2,00,000)
Cost of ab loss. 11,500
- Insurance company (8,050) (11,500*70%)
- Sales of damaged (5,750) (11,500,*50%)
Abnormal profit -2,300

(Note: In this question repairing expenses on closing stock is just estimated not paid, so it will be
deducted at the time of valuation of closing stock but it will not be credited to consignee’s account)

Q 30. Dharam of Dharampur sent some goods by adding 30% profit on invoice price at Rs. 6,88,500
to Vasant of Vansda. Freight and insurance was paid 5% of invoice price.
Dharam drew a bill on Vasant, which was accepted and returned immediately. After 1-month
Dharam had received from bank Rs. 1,65,750 at a discount of 10%.
PRO. JAY PARMAR 13
 In transit, 8% of invoice price of goods was stolen. Insurance company accepted a claim of Rs.
39,100. Vasant is entitled to get general commission at 9% and del credere commission at 4%.
Details of account of sale sent by Vasant are as under:
1) He paid Rs. 3,271 for freight and octroi and Rs. 13,730 for selling expenses.
2) He sold 30% of goods by adding 25% profit on invoice price for cash. Goods of Rs. 3,44,394
was sold for Rs. 4,09,000 on credit.
3) One customer was declared insolvent from whom Rs. 2,070 could not be recovered.
From the above particulars prepare consignment account in the books of Dharam and
Dharam account in the books of Vasant
Ans. Consignment account
Particular Amount Particular Amount
To goods sent (IP) 6,88,500 By diff. in goods sent 2,06,550
To cash (freight and ins. paid) 34,425 (6,88,500*30/100)
To bills discounted (WN.1) 4,250 By insurance company (claim) 39,100
To vasant (exp. paid) By P&L (ab. loss) (WN.2) 2,210
Freight and ins. 3,271 By vasant (sales) (WN.3)
Selling exp. 13,730 17,001 Cash 2,37,533
To vasant (commission) Credit 4,09,000 6,46,533
General (total sale) 58,188 By closing stock(WN.4)
Del (credit sale) 16,360 74,548 Stock 99,000
To diff in closing stock 29,700 + prop. Exp of nor’s 4,950
(99,000*30/100) (34,425*99,000/6,88,500)
To P&L (profit) 1,50,430 + prop. Exp of nee’s 511 1,04,461
(non-recurring only)
(3,271*99,000/6,33,420)

9,98,854 9,98,854
(Here invoice price is fixed after adding 30% profit on IP, so IP will be assumed as 100 and it includes
profit of 30%, so remaining 70 is cost)
WN.1 Bill discounted
Supp value of bill: 100
So discount for three month: 100*10%*3/12 = 2.50
So the cash received by consignee will be: 100-2.5 = 97.5

Here amount of cash is 1,65,750

So cash on 97.5……1,65,750
discount 2.5………? so, 1,65,750*2.5/97.5 = 4,250 (discount)
OR
Cash On 97.5……1,65,750
BR on 100……….? So, 1,65,750*100/97.5 = 1,70,000 (bills receivable)
Discount: 1,70,000*10%*3/12 = 4,250
WN.2 abnormal loss
IP of stolen goods (6,88,500*8%): 55,080

So the cost of stolen goods is (55,080*70/100): 38,556

+ prop exp by consignor (34,425*8%): 2,754
41,310
- Insurance company claim (39,100)
Abnormal loss 2,210
(note; consignee’s expenses can’t include because goods stolen in transit)

WN.3 sales
Goods available to consignee for sale: 6,88,500(sent) – 8% (stolen in transit) = 6,33,420
PRO. JAY PARMAR 14
Cash sales [(6,33,420*30%)+25%] = 2,37,533
Credit (IP of 3,44,394 sold for 4,09,000) = 4,09,000

WN.4 closing stock

Goods sent by consignor: 6,88,500
- Stolen (8%): (55,080)
Available to consignee 6,33,420
- Cash sale (IP)(30%) (1,90,026)
- Credit sale (IP) (3,44,394)
Closing stock(IP) 99,000

Dharam account (in the books of vasant)

Particular Amount Particular Amount
To bank (BP advance) 1,70,000 By bank account (sales) 2,37,533
To cash (exp by vasant) 17,001 By debtor’s account (credit) 4,09,000
To commission 74,548
To bank (final settlement)) (?) 3,84,984
6,46,533 6,46,533

VNSGU solved
Q:1 Parmar of Pardi consigned goods at some invoice price to Naik of Navsari. The invoice
price is fixed by adding 25% profit on cost price. Parmar paid Rs. 5,000 for freight and Rs.
4,000 for insurance. Parmar drew on Naik a three-month bill, which was discounted by Parmar
at 8% p.a. at Rs. 400 discounts after one month. Naik is entitled to get 8% general commission
and 5% del credere commission.
Naik sold ½ goods to Khush at Rs. 44,000 who paid Rs. 40,000 in cash afterward. ¼ of
goods were sold to Heny as per Parmar’s recommendation at Rs. 30,000. Rs. 25,000 received
from Heny. 1/6 of goods were sold for cash at Rs. 16,000. Whereas at the end of year Rs. 6,250
(invoice price) of goods (except proportionate expenses) on hand of Naik.
Naik paid Rs. 1,950 for selling expenses. Khush and Heny became bankrupt and 30%
amount could not be recovered from them. Naik remitted the balance amount by bank draft.
Prepare consignment account in the books of Parmar and Parmar’s account in the books of
Naik. (VNSGU, Oct-2019)
Ans. Consignment account In books of Parmar
Particular Amount Particular Amount
To goods sent on consignment 75,000 By diff. in goods sent (WN-2) 15,000
(IP) (WN-1) (75,000*25/125)
To cash a/c (paid by Parmar) To Naik’s a/c (sales)
Freight 5,000 Cash 16,000
Insurance 4,000 9,000 Credit 44,000
To bills discount a/c 400 Recommendation 30,000 90,000
To Naik ac (exp by Naik) To closing stock (IP)
Selling expenses 1,950 Stock (IP) 6,250
To Naik ac (commission) + prop exp. Parmar 750 7,000
General 7,200 (6,250*9000/75,000)

PRO. JAY PARMAR 15

 (90,000*8%)
Del-credere 2,200 9,400
(44,000*5%)
To Naik ac (bad debt) 1,500
(5,000*30%)
To diff. in closing stock 1,250
(6,250*25/125)
To P&L (profit) 13,500
1,12,500 1,12,500
Note:
1. Selling expenses paid by Naik could not be include as proportionate expenses in closing
stock because that is recurring expenses.
2. Bad debt of Khush will not be consider because that goods were sold by Naik on his
own responsibility while goods sold to Heny was on Parmar’s recommendation.
Parmar account In books of Naik
Particular Amount Particular Amount
To bills discount (advance) 30,000 By sales
To cash (exp paid by Naik) 1,950 Cash 16,000
To consignment (commission) 9,400 Credit 44,000
To bad debt 1,500 Recommendation 30,000 90,000
To Bank (bank draft) (?) 47,150
90,000 90,000

WN:1 Value of goods sent

Sup. Total goods sent on consignment (IP): 100
Sold to Khush (100* ½): 50
Sold to Heny (100* 1/4): 25
Sold for cash (100*1/6): 16.67
Closing stock: 8.33 (Rs. 6,250)
So now we have the value of closing stock is re. 6,250 from that we can find the value of
goods sent on consignment at an invoice price:
Closing stock on 8.333 -----------Rs. 6,250
Goods sent on consignment on 100 ----------- (?)
6,250*100/8.333 = 75,000 (IP)
WN:2 Cost price of goods sent on consignment (profit)
Invoice price is made after adding 25% profit on cost price
Consider cost price as: 100
+ profit: 25
Invoice price of goods sent: 125
So, from this now we can find the cost price and profit of goods sent on consignment:

PRO. JAY PARMAR 16

 Cost price: 75,000*100/125 = 60,000
Profit: 75,000*25/125 = 15,000

Q:2. Consignor consigned 400 smart phones at an invoice price of Rs. 9,999 each. The invoice
price is fixed after adding 33 1/3% of profit on invoice price. Consignor and consignee paid
non-recurring expenses Rs. 6,000 and Rs. 3,000 respectively. If closing stock is 68 smart
phones then find out closing stock value and write journal entry for closing stock in the books
of consignor. (VNSGU, Oct-2019)
Ans.
Value of closing stock (IP): 6,79,932 (68*9,999)
+ prop. Exp of consignor: 1,020 (68*6,000/400)
+ prop. Exp of consignee: 510 (68*3,000/400)
Value of closing stock 6,81,462

Profit included in closing stock: 6,79,932*33 1/3 /100 = 2,26,644

Journal entries

1. Closing stock a/c Dr. 6,81,462

To consignment a/c 6,81,462
2. Consignment a/c Dr. 2,26,644
To profit on cl. Stock 2,26,644

Q:3. The account sales of 600 TV sets received from Roshni and sold on account of and at risk
of Payal:

Account Sales
Particular Amount Amount Amount
Sales: 600 TV sets 21,60,000
(per set 3,600)
Less: expenses
Unloading expenses 4,500
Selling expenses 6,000
Transport expenses 9,045
Godown rent 9,000
Advt. expenses 3,000 31,545
Less: (commission)
5% general
1% del-credere 1,29,600 (1,61,145)
19,98,855
Less:
Advance
(DD No. 2003610,
sent date: 15-05-2016) (4,50,000)

PRO. JAY PARMAR 17

 Balance: 15,48,855
DD No. 2004201 enclosed herewith
of Rs. 15,48,855, stock in hand
(date: 31-3-2017) 45 TV sets

Additional details:

1) Bad debts amount of Rs. 3,600 against 1 set.

2) 20% above the invoice price is the sales price which is equal to cost plus 50%
3) Payal incurred forwarding expenses @rs. 15 per set.
4) During the transit 5 sets became fully damaged and Payal recovered 40% from
insurance company.
You are required to prepare only consignment account in the books of Payal.
(VNSGU, May-2018)

Ans. Consignment account In books of Payal

Particular Amount Particular Amount
To goods sent on consignment 19,50,000 By diff. in goods sent on 3,90,000
(IP)(650*3000) (WN:1 & 2) Consignment (650*600) (WN:1)
To cash (forwarding exp) 9,750 By bank (insurance) (WN:3) 4,830
(650*15) By P&L (loss of TV) (WN:3) 7,245
To Roshni a/c ([Link] Roshni) By Roshni (sales) 21,60,000
Unloading exp. 4,500 (600*3,600)
Selling exp. 6,000 By clo. Stock (45 Tv*3000)
Transport exp. 9,045 Value (IP): 1,35,000
Godown rent 9,000 + pro. Exp Payal 675
Advt. exp. 3,000 31,545 (45*15)
To Roshni a/c (commission) = prp. Exp. Roshni 945 1,36,620
General 1,08,000 (45*13,545/645)
(21,60,000*5%)
Del-credere 21,600 1,29,600
(21,60,000*1%)
To diff. in closing stock 27,000
(45*600)
To profit & loss (Profit)(?) 5,50,800
26,98,695 26,98,695
Note:
1. Roshni received only 645 TV because out of 650 TV, 5 TV were destroyed in transit
so Roshni will pay expenses only for 645 TV.
2. Here we have to assume that all sales are on credit basis because bad debt is given
and bad debt arise only in credit sales and also this is not sales on Payal’s
recommendation because nothing is mentioned regarding recommendation so all
sales are credit sales on the responsibility of Roshni.
3. Bad debt will note be included in consignment account because there is no
recommendation sales and also del-credere commission is allowed to Roshni.
PRO. JAY PARMAR 18
WN:1 calculation of cost price and profit
Selling price is 20% above the invoice price
IP: 100
+Profit: 20
SP: 120 (Rs. 3,600 per unit)
So invoice price per unit is 3,600*100/120 = Rs. 3,000
Profit in sales per unit is 3,600-3,000 = Rs. 600
Selling price is equal to cost plus 50%, from this we can find out cost price and profit of
invoice price:
Cost price: 100
+ Profit: 50
Selling price: 150 (Rs. 3,600)
So cost price per unit is 3,600*100/150 = Rs.2,400
Profit in invoice price per unit is 3,000 (IP) – 2,400 (CP) = Rs. 600

WN:2 total goods sent on consignment to Roshni

Sold: 600
+damaged: 5
+ cl. stock: 45
Total sent 650

WN:3 Goods destroyed in transit insurance company accept claim of 40%

Goods destroyed (CP): 12,000 (5*2,400)
+ prop exp by Payal: 75 (5*15)
Total loss with expenses 12,075
- insurance claim (40%) 4,830 (12,075*40%)
Actual loss 7,245
Note: Proportionate expenses of Roshni (consignee) will note be included because goods are
destroyed in transit.
Q:4. Madhav of Pune is sending a goods of Rs. 1,00,000 to Pravin of Navsari on consignment.
70%of goods were sold by Pravin for Rs. 1,00,000. Pravin is entitled to get 5% commission on
gross sales plus 25% of any surplus realized above cost price less total commission. Calculate
total commission. (VNSGU, May-2018)
Ans.
General commission: 5,000 (1,00,000*5%)

PRO. JAY PARMAR 19

 Commission on surplus less commission
Total surplus: 1,00,000 (sales) – 70,000 (cost of sales 70%) = 30,000
Now, deduct general commission from Surplus: 30,000 – 5,000 = 25,000
Now we have Rs. 25,000 as surplus above cost price less general commission
Still there is 25% surplus commission is included in Rs. 25,000, so we use 25/125
Surplus Commission: 25,000*25/125 = 5,000
Now total commission is:
General commission: 5,000
+ surplus commission: 5,000
Total commission 10,000
Q:5. On 1-1-2017 Surati of Surat consigned some litres oil, at Rs. 90 per litres cost price to his
agent Valsadi of Valsad, but the proforma invoice price made out at figure shoe a profit of 33
1/3% on invoice price. Surati paid the expenses of freight Rs. 5,000 and insurance 15,000.
On 1-1-2017 Surati drew a bill of Rs. 2,50,000 for three months on Valsadi, which was
immediately returned by the later duly accepted. Surati discounted this bill in the bank on 16-
2-2017 at 12% discount per annum.
Valsadi reported in the account sale that:
1) He paid Rs. 5,000 for octroi, Rs. 5,000 for insurance and Rs. 7,820 for recurring
expenses.
2) 9/20 oil were sold for cash at 25% profit on invoice price.
3) 5/20 oil were sold on credit to Bharuchi at 50% profit on invoice price.
4) 1/10 oil were sold to Amdavadi as per recommendation of Surati at 35% profit on
invoice price.
5) He purchases for his personal use at the invoice price worth Rs. 54,000.
6) 1/20 oil were destroyed in godown, for which insurance company paid a claim of 60%.
7) 1/20 oil were damaged due to leakage, which is considered as a normal loss.
8) After paying 75% amount both customers were declared insolvent and 75% amount
could not be recovered from their personal assets.
Valsadi entiled to receive general commission of 5%on sales and 2% del-credere
commission on credit sales and Valsadi is also entitled to receive 1/8 share of net profit after
deducting commission, del-credere commission and share profit.
From the above particulars prepare in the books of surati:
1) Consignment account
2) Valsadi’s account.

Ans.

PRO. JAY PARMAR 20

 Consignment account (in the books of Surati)
Particulars Amt. Particulars Amt.
To goods sent on consignment 5,40,000 By diff. in goods sent (WN:2) 1,80,000
(WN:1) (5,40,000*33 1/3%)
To cash a/c (exp. By Surati) By Valsadi a/c (sales) (WN:4)
Freight 5,000 Cash 3,03,750
Insurance 15,000 20,000 Credit 2,02,500
To bills disc. (WN:3) 3,750 Rec. 67,500
(2,50,000*1.5/12 *12%) Personal 54,000 6,27,750
To Valsadi a/c By insurance co. (WN:5) 11,700
Octroi 5,000 By P&L (loss on damage) 7,800
Insurance 5,000
Reccu. Exp. 7,820 17,820
To valsadi a/c (commssion)
General 31,388
Del-credere 4,050 35,438
To valsadi a/c (bad debt) 12,656
[(67,500*25%)*75%] (WN-6)
To valsadi a/c (profit share) 21,954
[(profit)1,97,586*1/9]
To P&L a/c (profit) (?) 1,75,632
8,27,250 8,27,250

Valsadi’s account
Particulars Amt. Particulars Amt.
To consignment a/c (sales) By bills rece. (advance) 2,50,000
Cash 3,03,750 By consignment (exp)
Credit 2,02,500 Octroi 5,000
Rec. 67,500 Insurance 5,000
Personal 54,000 6,27,750 Reccu. Exp. 7,820 17,820
By consignment (commission) 35,438
By consignment (bad debt) 12,656
By consignment (profit share) 21,954
By Bank draft (?) 2,89,882
6,27,750 6,27,750

WN:1 Calculation of goods sent on consignment

Supp goods sent on consignment: 100
Less. 9/20 sold for cash (100*9/20): (45)
Less: 5/20 sold to Bhruchi (100*5/20): (25)
Less: 1/10 sold to Amdavadi (100*1/10): (10)
Less: 1/20 destroyed in (100*1/20): (5)
Less: 1/20 normal loss (100*1/20): (5)
Purchase for personal use: 10 (IP for personal use Rs. 54,000)

PRO. JAY PARMAR 21

So from this we can find out invoice price of goods sent on consignment:
On personal use 10 ------- IP is Rs. 54,000
So on goods sent 100 -------- IP (?)
54,000*100/10 = Rs. 5,40,000
Goods sent on consignment at invoice price is Rs. 5,40,000
WN:2 Calculation of cost price and profit
Invoice price is fixed after adding 33 1/3% profit on invoice price.
Sup. IP: 100 (Rs. 5,40,000)
Less profit: 33.33
Cost price 66.67

So Cost price of goods is 5,40,000*66.67/100 = Rs. 3,60,000

Profit on goods sent is 5,40,000*33.33/100 = Rs. 1,80,000

WN:3 Bills discount

Bill drew on 1-12017 (of 3 months of Rs. 2,50,000)
Discounted on 16-2-2017 (after 1.5 months at 12% p.a. discount)
So, bills discount: 2,50,000*1.5/12(remaining months) *12/100 = 3,750

WN:4 sales
Cash sales: [(5,40,000*9/20) + 25% profit] = 3,03,750
Credit sale to Bharuchi: [(5,40,000*5/20) + 50% profit] = 2,02,500
Recommendation sale: [(5,40,000*1/10) + 25% profit] = 67,500
Purchased for Personal at invoice price is given = 54,000

WN:5 goods destroyed

Cost price of Goods destroyed: 18,000 (3,60,000*1/20)

+ prop. Exp of Surati: 1,000 (20,000*18,000/3,60,000) or (20,000*1/20)

+ prop. Exp of Vlasdi: 500 (10,000*18,000/3,60,000) or (10,000*1/20)

Total damaged 19,500

Less. Ins. Claim (11,700) (19,500*60%)

Actual loss 7,800 (transfer to P&L)

PRO. JAY PARMAR 22
WN: 6 Calculation of bad debts
 Bad debt can only be calculated on Recommendation sale
Recommendation sale is 67,500, out of this debtor pays 75% amount and from remaining
25% creditor is unable to recover 75%.
Recommendation sale: 67,500
- paid 75%: 50,625 (67,500*75%)
Outstanding amount 25%: 16,875
From this we recovered only 25% 4,219 (16,875*25%)
Amt. not recovered 75% 12,656 (Bad-debt)

Q:6. Naik of Navsari sent goods costing Rs. 4,81,950 by adding 30% profit on invoice price to
Parmar of Pardi. At the time of dispatching he paid freight and insurance was 5% of invoice
price.
Naik drew a four months bill on Parmar which Parmar accepted and returned
immediately. After one-month Naik discounted this bill in bank at Rs. 1,65,750.
In the transit 8% invoice price of goods was stolen. Insurance company accepted a claim
at Rs. 39,100. Parmar is entitled to get 9% general commission and 4% del-credere commission
Following is the Naik’s account in the books of Parmar:
Particulars Amt. Particulars Amt.
To bills payable a/c 1,70,000 By cash a/c 2,37,533
To cash a/c 17,100 (30% of goods at 25% profit
(freight + selling exp.) on IP)
To commission a/c 74,548 By debtors 4,09,000
To bank a/c 3,84,984 (Rs. 3,44,394 invoice price of
goods)
6,46,533 6,46,533
One customer of credit sale declared insolvent from whom Rs. 1,111 could not be
recovered. Prepare consignment account in the books of Naik. (VNSGU, March-2019)
Ans. Consignment account
Particular Amount Particular Amount
To goods sent (IP) (WN-5) 6,88,500 By diff. in goods sent (WN-5) 2,06,550
To cash (freight and ins. paid) 34,425 (6,88,500*30/100)
To bills discounted (WN.1) 4,250 By insurance co. (claim) 39,100
To Parmar a/c (exp. paid) By P&L (ab. loss) (WN.2) 2,210
Freight and ins. 3,271 By Parmar a/c (sales) (WN.3)
Selling exp. 13,730 17,001 Cash 2,37,533
To Parmar a/c (commission) Credit 4,09,000 6,46,533
Gen. (total sale) 58,188 By closing stock(WN.4)
Del (credit sale) 16,360 74,548 Stock 99,000
To diff in closing stock 29,700 + prop. Exp of nor’s 4,950
(99,000*30/100) (34,425*99,000/6,88,500)

PRO. JAY PARMAR 23

 To P&L (profit) 1,50,430 + prop. Exp of nee’s 511 1,04,461
(non-recurring only)
(3,271*99,000/6,33,420)

9,98,854 9,98,854
Note: The given bad debt of Rs. 1,111 should not be consider because there are no
recommendation sale and del-credere commission is also paid, but if del-credere commission
wasn’t paid that time we can consider this bad debt on debit side of consignment account.

WN.1 Bill discounted

Supp value of bill: 100
So discount for three month: 100*10%*3/12 = 2.50
So the cash received by consignee will be: 100-2.5 = 97.5

Here amount of cash is 1,65,750

So cash on 97.5……1,65,750
discount 2.5………? so, 1,65,750*2.5/97.5 = 4,250 (discount)
OR
Cash On 97.5……1,65,750
BR on 100……….? So, 1,65,750*100/97.5 = 1,70,000 (bills receivable)
Discount: 1,70,000*10%*3/12 = 4,250

WN.2 abnormal loss (CP- cost price)

IP of stolen goods (6,88,500*8%): 55,080

So the cost of stolen goods is (55,080*70/100): 38,556

+ prop exp by consignor (34,425*8%): 2,754
41,310
Less. Insurance company claim (39,100)
Abnormal loss 2,210
(Note: consignee’s expenses can’t include because goods stolen in transit)

WN.3 sales

Goods available to consignee for sale: 6,88,500(sent) – 8% (stolen in transit) = 6,33,420

Cash sales [(6,33,420*30%)+25%] = 2,37,533
Credit (IP of 3,44,394 sold for 4,09,000) = 4,09,000

WN.4 closing stock (IP)

Goods sent by consignor: 6,88,500

- Stolen (8%): (55,080)
Available to consignee 6,33,420
- Cash sale (IP)(30%) (1,90,026)
- Credit sale (IP) (3,44,394)
Closing stock(IP) 99,000

PRO. JAY PARMAR 24

WN:5 Calculation of Invoice price and Profit

Here invoice price is fixed after adding 30% profit on IP, so IP will be assumed as 100 and it
includes profit of 30%, so remaining 70 is cost. So now we have available value of cost price
is 4,81,950)

IP: 100
Less. Profit 30
Cost price : 70 (4,81,950)

So Invoice price is: 4,81,950*100/70 = 6,88,500

Profit is: 6,88,500*30% = 2,06,550

THEORY QUESTION
1) Valuation of closing stock
2) General commission and del-credere commission
3) Proforma invoice
Ans. 3. proforma invoice with imaginary figures.

Gram: Bharat : Phone: 123456

The Bharat trading corporation
Relief road, Ahmedabad.
Pro-forma invoice of goods sent to Mr. Jay to be sold on commission on our behalf.
Particulars Rate per pair Rs. Total Rs.
500 pairs of “Liberty” Boots Q brand size-8 500 2,50,000
Add. Expenses
Wages 1,000
Insurance 1,000 2,000
2,52,000
Ahmedabad J.G PARMAR
1-1-2019 Manager

Important questions for practice: Q:18, Q:22, Q:30, Q:44, Q:46, Q:48
BOOK: FINANCIAL ACCOUNTING-2, [Link] Prakashan, 15TH Edition – 2019-2020.

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PRO. JAY PARMAR 25