Q.A consigned 1,000 units of goods, costing ₹50 each, to B. A paid ₹5,000 as freight and ₹2,000 as insurance while despatching the goods. B paid ₹1,000 as carriage on receiving the consignment and ₹500 as godown rent, sold 800 units for ₹60,000 during the year, and is entitled to a commission of 5% on sales. B remitted the balance due after deducting the commission and the expenses reimbursable. Prepare the Consignment Account in the books of A, and ascertain the profit or loss on the consignment.

Total every cost and expense of the consignment on the debit side, and every sale plus the value of the 200 unsold units on the credit side; the balancing figure is the profit.

Step 1 — Value the unsold stock. Non-recurring expenses to include: A's freight ₹5,000 + insurance ₹2,000 = ₹7,000, plus B's carriage ₹1,000 (a non-recurring expense of getting the goods into a saleable state); B's godown rent of ₹500 is a recurring/selling expense and is excluded from the valuation.

Total cost for valuation = 50,000 (cost of goods) + 7,000 (A's expenses) + 1,000 (B's carriage) = ₹58,000. Cost per unit = 58,000 ÷ 1,000 = ₹58. Units unsold = 1,000 − 800 = 200. Value of unsold stock = 200 × 58 = ₹11,600.

Step 2 — Compute B's commission. Commission = 60,000 × 5% = ₹3,000.

Step 3 — Prepare the Consignment Account.

Consignment Account (in the books of A)

Step 4 — For completeness, B's Account (in A's books) confirms the amount B must remit:

| Dr | Particulars | Amount (₹) | Cr | Particulars | Amount (₹) |

|---|---|---|---|---|---| …

A common error is leaving out B's non-recurring carriage of ₹1,000 while valuing the closing stock (using only A's freight and insurance), or wrongly including B's godown rent in that valuation — only expenses incurred in gettin …