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    Consignment

    Uploaded by

    Maurice Agbayani
    The document discusses accounting for consignment sales transactions. It provides details on how consignment sales and inventory should be recorded by both the consignor and consignee. Specifically, it states that the consignee records consigned inventory as an asset and liability, recognizes revenue when selling to customers, and prepares reports for the consignor. The consignor recognizes revenue when the consignee sells the goods. Goods on consignment should be included in the consignor's inventory. The consignor recognizes revenue and cost of goods sold when the consignee sells the goods to a third party. Revenue is recognized on consignment sales when goods are transferred to and sold by the consignee to customers.

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    © All Rights Reserved
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    Consignment

    Uploaded by

    Maurice Agbayani
    96 views4 pages
    The document discusses accounting for consignment sales transactions. It provides details on how consignment sales and inventory should be recorded by both the consignor and consignee. Specifically, it states that the consignee records consigned inventory as an asset and liability, recognizes revenue when selling to customers, and prepares reports for the consignor. The consignor recognizes revenue when the consignee sells the goods. Goods on consignment should be included in the consignor's inventory. The consignor recognizes revenue and cost of goods sold when the consignee sells the goods to a third party. Revenue is recognized on consignment sales when goods are transferred to and sold by the consignee to customers.

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    The document discusses accounting for consignment sales transactions. It provides details on how consignment sales and inventory should be recorded by both the consignor and consignee. Specifically, it states that the consignee records consigned inventory as an asset and liability, recognizes revenue when selling to customers, and prepares reports for the consignor. The consignor recognizes revenue when the consignee sells the goods. Goods on consignment should be included in the consignor's inventory. The consignor recognizes revenue and cost of goods sold when the consignee sells the goods to a third party. Revenue is recognized on consignment sales when goods are transferred to and sold by the consignee to customers.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    96 views4 pages

    Consignment

    Uploaded by

    Maurice Agbayani
    The document discusses accounting for consignment sales transactions. It provides details on how consignment sales and inventory should be recorded by both the consignor and consignee. Specifically, it states that the consignee records consigned inventory as an asset and liability, recognizes revenue when selling to customers, and prepares reports for the consignor. The consignor recognizes revenue when the consignee sells the goods. Goods on consignment should be included in the consignor's inventory. The consignor recognizes revenue and cost of goods sold when the consignee sells the goods to a third party. Revenue is recognized on consignment sales when goods are transferred to and sold by the consignee to customers.

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    © All Rights Reserved
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    CONSIGNMENT

    1) In consignment sales, the consignee


    a) records the merchandise as an asset in its books
    b) records a liability for the merchandise held on consignment
    c) recognizes rvemnie when it ships merchandise to the consignor
    d) prepares an account report for the consignor which shows sales, expenses and
    cash receipts

    2) Revenue is recognized by the consignor when


    a) the goods are shipped to the consignee
    b) the consignee receives the goods
    c) the consignor receives an advance from the consignee
    d) the consignor received an account sal3s from the consignee

    3) Goods on consignment should be included in the inventory of


    a) the consignor but not the consignee
    b) both the consignor and the consignee
    c) the consignee but not the consignor
    d) neither the consignor nor the consignee

    4) In accounting for sales on consignment, sales revenue and the related CGS should be recognized by the:
    a) consignor when the goods are shipped to the consignee
    b) consignee when the goods are shipped to the third party
    c) consignor when notification is received that the consignee has sold the goods
    d) consignee when cash is received from the customer.

    5) Which of the following is most true regarding consignment arrangements?


    a) revenue is recognized at a point in time when the consignment arrangenent is made
    b) revenue is recognized when goods are transferred to the consignee
    c) revenue is recognized upon sale by the consignee to an end customer
    d) revenue is never recognzed because GAAP does not allow such arrangements.

    6) On Nov.30, North Company consigned 90 freezers to Watson Company for sale at P16,000 each
    and paid P3,600 for transportation costs. A report of sales was received on December 30 from Watson
    reporting the sale of 20 freezers , together with a remittance of P272,000 amount due, which was net of
    the 15% agreed comnission. How much, and in what month, should North Company recognize the consignment revenue?

    7) On June 1, Breeze Company shipped 25 television sets to Lena, Inc. on consignment. The sets are to be sold at an
    advertised price of P20,000 @. The cost of each set to the consignor is P10,000. The cost of the shipment paid by the
    consignor was P7,500. The consignor agreed to absorb the consignee's expenditures for freight and also to allow the
    consignee P1,000 for delivery and installation of each set. Commission is at 25% of the selling price. On June 30, Lena,Inc
    submitted the following summary of consignment sales:
    Sets received 25
    Sets sold 8
    Sets returned to consignor( defective) 2
    Sets on hand 15

    June 30 sales (8 sets at P20,000) P160,000


    Charges: Freight in 5,000
    delivery and installment 8,000
    commission 40,000 53,000
    107,000
    Remmitance as enclosed 25,000
    Balance Owed (collections not yet made) 82,000

    1) The value of the inventory in the possession of the consignee is _______


    2) The profit of the consignor for the units sold is ___________________

    8) On Nov.1,2020, Western Appliances ships five of its appliances to ABC Store on consignment. Each unit is
    to be sold at P25,000, payable P5,000 in the month of purchase and P1,000 per month thereafter. The consignee
    is entitled to a 20% commission of all amounts collected on consignment sales. ABC Store sells 3 appliances in November
    and 1 in December. Regular monthly collections are made by the consignee, and appropriate cash remittances are made to
    the consignor at the end of each month. The cost of the appliances to the consignor is P15,500 per unit. The consignor paid
    shipping costs of P5,000 to the consignee.

    Tne total amount remitted to the consignor for 2020 is ______________

    9) On June 1, DD Company shipped 25 DVD's to BB View Store on consignmebt. The DVD is to be sold at P2,000 per item.
    The cost of each item to the consignor is P1,000. The consignor paid P375 to ship the merchandise. Commission is 25% of
    sales. During the month, two DVD's were returned to the consignor.

    On June 30, BB View Store remitted the amount due to the consignor after deducting commission of P4,000.
    1) The amount remitted by BB View Store is _______________
    2) The consignment profit is __________________
    3) The cost of the inventory on consignment is _______________

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