Back to: FINANCIAL ACCOUNTING SS2
Welcome to class!
In today’s class, we will be talking more about loan capital – debenture types. Enjoy the class!
Loan Capital – Debenture Types II
Consignment of good means the sending of goods by a supplier to his agent to receive, store and sell them on behalf of the supplier after which the proceeds, having deducted all expenses incurred, will be remitted to the supplier. The sender of the goods is called consignor while the agent to whom the goods are sent is called consignee.
In the Books of the consignor, you will open
- Debits all expenses relating to goods consigned
- Credits all revenue relating to goods consigned
Goods sent on consignment account:
- Debit trading a/c with the value of goods consigned
- Credit consignment account
Bank account (Extracts):
- Debit proceed from consignee (agent) after deducting all expenses incurred.
- Credit all expenses incurred by the consignor.
Consignee account i.e Debit sales account
- Credit all expenses incurred in respect of sales
- Define the term consignment of goods
- Explain a. Consignor b. Consignee
On January 1, 1995, Pfizer Product Plc consigned 10 cartons of Visine eye drop to Standard Pharmacy at N150 per carton. In the course, he paid N400 for freight charges, N140 for insurance, and N850 for advertisement. On receiving the goods on January 5 Standard Pharmacy incurred the following expenses. Storage N100, wages N380, selling expenses N120. By January 24, Standard Pharmacy had sold all the articles and realized a total sum N21,500 in the following analysis is sales by cash N20,000, Credit sales to Kunle N1,500. The agreed commission was 3% and a del-credere commission was 2% of the total sales. Required
- Prepare the account submitted by the consignee on 31/1/95
- Prepare all necessary account to record the transaction in the books of the consignor.
- Account sales submitted by Standard Pharmacy
Less: Storage 100
Selling expenses 120
Commission: General (0.03 x 21,500) 645
‘’ Del-credere (0.02 x 21,500) 430 (1,675)
Sight draft enclosed 19,825
- In the books of Pfizer Product Plc. (consignor)
Good sent on consignment account
Trading a/c (N1,500 x 10) 15,000 consignment 15,000
Goods sent on consignment 15,000 standard pharmacy 21,500
Bank: freight cheque 400
Selling expenses 120
Commission: General 645
Del-credere commission 430
P&L a/c (profit) 3,435
Bank account (Extracts)
Standard Pharmacy 19,825 Consignment N
Freight charges 400
Standard Pharmacy account (consignee)
Consignment: sales 21,500 Consignment N
Selling expense 120
Comm. General 645
- What are books of prime entry
- List any seven books of prime entry
- Explain the following concepts (a) business entity (b) going – concern
- What is a ledger
- List and explain three classifications of ledger accounts
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