Accountancy · Ch 2 — Consignment Accounts
Accounting Records in the Books of the Consignor
Accounting Records in the Books of the Consignor
In the consignor's own books, a consignment is recorded through a small, fixed set of accounts that a Telangana Intermediate commerce consignment accounts answer should always be able to reproduce without hesitation. The three central accounts are the Consignment Account (a combined trading-and-profit account for that particular consignment, usually named after the consignee or the destination, e.g. "Consignment to Chennai Account"), the Consignee's Personal Account (a normal personal account, debited when the consignee owes money and credited when he is reimbursed or paid commission), and the Goods Sent on Consignment Account (a nominal account that mirrors, and is finally closed against, the Purchases/Trading Account).
The standard sequence of journal entries in the consignor's books is:
| # | Transaction | Journal entry |
|---|---|---|
| 1 | Goods sent to the consignee | Consignment A/c ... Dr / To Goods Sent on Consignment A/c |
| 2 | Expenses paid by the consignor (freight, insurance, packing) | Consignment A/c ... Dr / To Bank A/c |
| 3 | Abnormal loss in transit or with the consignee | Abnormal Loss A/c ... Dr / To Consignment A/c |
| 4 | Insurance claim admitted against the abnormal loss | Bank/Insurance Co. A/c ... Dr, Profit and Loss A/c ... Dr (balance, if any) / To Abnormal Loss A/c |
| 5 | Sales made by the consignee (per Account Sales) | Consignee's A/c ... Dr / To Consignment A/c |
| 6 | Expenses paid by the consignee (per Account Sales) | Consignment A/c ... Dr / To Consignee's A/c |
| 7 | Commission earned by the consignee | Consignment A/c ... Dr / To Consignee's A/c |
| 8 | Value of unsold stock at the end of the period | Consignment Stock A/c ... Dr / To Consignment A/c |
| 9 | Profit on consignment (if the Consignment Account shows a credit balance) | Consignment A/c ... Dr / To Profit and Loss A/c (reverse entry if it is a loss) |
| 10 | Amount finally remitted by the consignee in settlement | Bank A/c ... Dr / To Consignee's A/c |
A combined trading-and-profit account opened in the consignor's books for each consignment, debited with cost and expenses and credited with sales and closing stock; its balance is the pr …
A nominal account credited when goods are despatched on consignment and finally closed by transfer to the Trading Account, so consigned goods are not counted twice …