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Csa 11

This document discusses key aspects of consignment arrangements: 1. It provides an example of a consignment transaction between CTC and Lovely Company involving the sale of handbags. 2. It discusses how inventory accounts should be adjusted for consigned goods, including reducing inventory by the cost of goods held by others. 3. It provides an example of how to account for consigned goods received by Alps from Teds, including the payable that should be reported on Alps' balance sheet.

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Von Andrei Medina
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328 views1 page

Csa 11

This document discusses key aspects of consignment arrangements: 1. It provides an example of a consignment transaction between CTC and Lovely Company involving the sale of handbags. 2. It discusses how inventory accounts should be adjusted for consigned goods, including reducing inventory by the cost of goods held by others. 3. It provides an example of how to account for consigned goods received by Alps from Teds, including the payable that should be reported on Alps' balance sheet.

Uploaded by

Von Andrei Medina
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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ENABLING ASSESSMENT

1. On August 31, 2021, CTC Company consigned to Lovely Company ten ladies handbags which cost
CTC P300 each. CTC paid freight charge of P150 on the shipment.

On September 30, 2021, Lovely Company submitted an account sales reporting that is sold for cash
seven handbags for which it remitted P3,165 representing the net proceeds after deductions as follows:

Commission 20% of the selling price


Advertising placed upon receipt of shipment P120
Delivery of units sold 75

● The total sales price of the seven handbags sold is


4200

● The inventory of the unsold handbags at September 30, 2021 is valued at


945

● The consignor realized a net income on the consignment amounting to


960

2. The following items were included in Elma’s inventory account at December 31,2021:

Merchandise out on consignment at sales price (mark-up of 40% on sales price) P40000
Goods purchased, in transit, shipped FOB shipping point 36000
Goods held on consignment by Elma 27000

● Elma’s inventory account at December 31, 2021 be reduced by


43000

3. On December 31, 2021, Alps received 505 sweatshirts on consignment from Teds. Cost of each
sweatshirt was P80 each and was priced to sell at P100. Alps is entitled to a 10% commission. On
December 31, 5 sweatshirts remained on hand while 5 were returned for being defective.

● In its December 31,2021 balance sheet, Alps should report as payable for consigned goods in
the amount of
44550

4. In a consignment arrangement, revenue is recognized at the point in time when the consignment
arrangement is made
False

5. Consignment arrangement is a specialized marketing method whereby the consignee takes possession
of merchandise but little remains with the consignor
True

6. A consignment arrangement is implied when an entity has discretion in establishing prices for the other
party’s goods or service.
False

7. Goods on consignment should be included in the inventory of both the consignor and the consignee.
False

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