On 1-1-2020 Balaji of Hyderabad consigned goods valued at Rs. 50,000 to Shivaji of Sholapur. Balaji paid cartage and other expenses of Rs. 2,400. On 31-3-2020 sent the account sales with the following information -
a. 3/4th of the goods sold for Rs. 48,000
b. Shivaji incurred exp

Question

On 1-1-2020 Balaji of Hyderabad consigned goods valued at Rs. 50,000 to Shivaji of Sholapur. Balaji paid cartage and other expenses of Rs. 2,400. On 31-3-2020 sent the account sales with the following information -
a. 3/4th of the goods sold for Rs. 48,000
b. Shivaji incurred expenses amounting to Rs. 1,200.
c. Shivaji is entitled to receive commission @ 5% on sales.
Bank draft was enclosed for the balance. Prepare necessary ledger accounts in the books of Balaji.

Accepted Answer

>

> [!TLDR]
> Goods cost Rs. 50,000; 3/4 sold for Rs. 48,000, leaving 1/4 unsold. Closing stock = 1/4 of (50,000 cost + 2,400 consignor's expenses) = Rs. 13,100. Charges are consignor's expenses Rs. 2,400, consignee's expenses Rs. 1,200 and commission Rs. 2,400 (5% of 48,000). Consignment profit = Rs. 5,100; Shivaji remits the balance Rs. 44,400 by bank draft.
>
> **Working note - valuation of closing stock**
> Unsold goods = 1/4 of the consignment. Only the consignor's non-recurring expenses (cartage, Rs. 2,400) are added to the cost for stock valuation; the consignee's Rs. 1,200 is treated as selling expense.
> Closing stock = 1/4 x (50,000 + 2,400) = 1/4 x 52,400 = Rs. 13,100.
>
> **Consignment to Sholapur Account (books of Balaji)**
>
> | Particulars | Amount (Rs.) | Particulars | Amount (Rs.) |
> |---|---|---|---|
> | To Goods sent on consignment | 50,000 | By Shivaji (Sales) | 48,000 |
> | To Bank (consignor's expenses) | 2,400 | By Consignment Stock c/d | 13,100 |
> | To Shivaji (consignee's expenses) | 1,200 | | |
> | To Shivaji (commission 5% of 48,000) | 2,400 | | |
> | To Profit transferred to P and L A/c | 5,100 | | |
> | | 61,100 | | 61,100 |
>
> **Shivaji Account (consignee's personal account)**
>
> | Particulars | Amount (Rs.) | Particulars | Amount (Rs.) |
> |---|---|---|---| …

Particulars	Amount (Rs.)	Particulars	Amount (Rs.)
To Goods Sent on Consignment A/c	3,00,000	By Prasad A/c (Gross Sales)	4,50,000
To Bank A/c (freight and insurance)	12,000
To Prasad A/c (unloading and godown rent)	10,000
To Prasad A/c (commission 5% of 4,50,000)	22,500
To Profit transferred to Profit and Loss A/c	1,05,500
Total	4,50,000	Total	4,50,000

Particulars	Amount (Rs.)	Particulars	Amount (Rs.)
To Consignment A/c (Gross Sales)	4,50,000	By Bills Receivable A/c (bill accepted)	1,00,000
		By Consignment A/c (unloading and godown rent)	10,000

Particulars	Amount (Rs.)	Particulars	Amount (Rs.)
To Goods Sent on Consignment A/c	60,000	By Karan's A/c (Sales)	50,000
To Bank A/c (Ravi's expenses)	4,000	By Stock on Consignment A/c (c/d)	32,000
To Karan's A/c (expenses)	3,000
To Karan's A/c (commission 6% of 50,000)	3,000
To Profit transferred to P&L A/c	12,000
Total	82,000	Total	82,000

Particulars	Amount (Rs.)	Particulars	Amount (Rs.)
To Goods Sent on Consignment A/c	20,000	By Arjun A/c (Sales)	30,000
To Cash A/c (freight 800 + insurance 700)	1,500
To Arjun A/c (sales expenses)	750
To Arjun A/c (commission 5% of 30,000)	1,500
To Profit transferred to Profit and Loss A/c	6,250
Total	30,000	Total	30,000

Particulars	Amount (Rs.)	Particulars	Amount (Rs.)
To Goods sent on consignment	10,000	By Mehta and Co. (Sales)	18,500
To Bank (consignor's expenses)	500
To Mehta and Co. (carriage 600 + other 400)	1,000
To Mehta and Co. (commission 5% of 18,500)	925
To Profit transferred to P and L A/c	6,075
	18,500		18,500

Concept understanding — Consignment Account and Related Ledger Accounts in the Consignor's Books

Working — Valuation of unsold stock

Consignment to Karimnagar Account

Karan's Account (Consignee)

Particulars	Amount (Rs.)	Particulars	Amount (Rs.)
To Goods sent on consignment	50,000	By Shivaji (Sales)	48,000
To Bank (consignor's expenses)	2,400	By Consignment Stock c/d	13,100
To Shivaji (consignee's expenses)	1,200
To Shivaji (commission 5% of 48,000)	2,400
To Profit transferred to P and L A/c	5,100
	61,100		61,100

Dr — Particulars	Amount (₹)	Cr — Particulars	Amount (₹)
To Goods Sent on Consignment (100 x 600)	60,000	By Nikhil (Sales 80 x 800)	64,000
To Bank (Insurance 1,000 + Freight 1,000)	2,000	By Consignment Stock c/d	12,400
To Nikhil (Selling Exp. 500 + Commission 6,400)	6,900
To Profit transferred to P&L A/c	7,500
Total	76,400	Total	76,400

Particulars	Amount (₹)	Particulars	Amount (₹)
To Goods sent on consignment	30,000	By Jahnavi — Sales	22,000
To Bank — cartage & other expenses	2,000	By Consignment Stock c/d	16,000
To Jahnavi — expenses	1,200
To Jahnavi — commission (5% of 22,000)	1,100
To Profit on consignment (to P&L A/c)	3,700
Total	38,000	Total	38,000

Particulars	Amount (Rs.)	Particulars	Amount (Rs.)
To Goods sent on consignment (200 × 400)	80,000	By Rama Brothers — Sales (100 × 520)	52,000
To Cash — Freight & Insurance	5,000	By Consignment Stock A/c	42,500
To Rama Brothers — Expenses (2,400 + 1,300)	3,700
To Rama Brothers — Commission (10% of 52,000)	5,200
To Profit transferred to P&L A/c	600
Total	94,500	Total	94,500

Particulars	Amount (Rs.)	Particulars	Amount (Rs.)
To Consignment A/c	42,500	By Balance c/d	42,500
Total	42,500	Total	42,500

Particulars	Amount (Rs.)	Particulars	Amount (Rs.)
To Consignment A/c (sales)	52,000	By Bills Receivable (bill accepted)	50,000
To Balance c/d (due to Rama Brothers)	6,900	By Consignment A/c (expenses)	3,700
		By Consignment A/c (commission)	5,200
Total	58,900	Total	58,900
…

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