1. Sridhar of Kolar entered into a consignment agreement with Giridhar of Mangalore.

The following transactions took place between them.

i. Goods of the value of ₹10,000 were consigned by Sridhar to Giridhar.
ii. The expenses incurred by the consignor on the consignment were freight ₹700
and insurance ₹300.
iii. A bill of ₹6,000 was drawn by Sridhar on Giridhar as advance.
iv. The bill was discounted by Sridhar of ₹5,900 and the discount charge was
treated as an expense of consignment by Sridhar.
v. ¾ of the consignment was sold by Giridhar for ₹12,000, ₹7,000 for cash and
₹5,000 on credit. Half of the remaining goods were sent back by Giridhar to
Sridhar incurring an expense of ₹100 on the return.
vi. Giridhar’s expenses are carriage ₹200 and Godown rent and insurance ₹300.
vii. Giridhar was entitled to a commission of 8% on sales.
viii. Giridhar sent a sight draft to Sridhar for the amount due from him.
Pass the necessary journal entries and prepare the necessary accounts in the
books of both the parties.
Solution:
Ledger accounts in the books of Consignor
 Consignment A/C
 Consignee’s A/C
 Consignment stock A/C
 Goods sent on consignment A/C
Ledger accounts in the books of consignee
 Consignor’s A/C

Journal entries in the books of Sridhar of Kolar (Consignor)

Date Particulars Debit Credit
1 Consignment to Mangalore A/C Dr 10,000
To Goods sent on Consignment A/C 10,000
(Being the cost of goods consigned)
2 Consignment to Mangalore A/C Dr 1,000
To Bank A/C 1,000
Freight 700
Insurance 300
(Being the expenses incurred on consignment by
consignor)
3 Bill receivable A/C Dr 6,000
To Giridhar’s A/C 6,000
(Being the bills receivable received from the
consignee as an advance)
4 Bank A/C Dr 5,900
Discount on Bill receivable A/C Dr 100
To Bills receivable A/C 6,000
 (Being the bills receivable discounted with the
bank)
5 Consignment to Mangalore A/C Dr 100
To Discount on Bills receivable A/C 100
(Being the discount on bill treated as an expense
of consignment and debited to consignment A/C)
6 Giridhar’s A/C Dr 12,000
To Consignment to Mangalore A/C 12,000
(Being the gross sale effected by consignee)
7 Goods sent on consignment A/C Dr 1,250
10,000×3/4 = 7,500 sold
10,000-7,500 = 2,500 remaining/ unsold
2,500/2 = 1,250
To Consignment to Mangalore A/C 1,250
(Being the cost of goods returned by consignee)
8 Consignment to Mangalore A/C Dr 100
To Giridhar’s A/C 100
(Being the expenses incurred by the consignee on
the goods returned)
9 Consignment to Mangalore A/C Dr 500
To Giridhar’s A/C 500
Carriage 200
Godown rent and insurance 300
(Being the expenses incurred by the consignee)
10 Consignment to Mangalore A/C Dr 960
12,000×8%
To Giridhar’s A/C 960
(Being the commission on sales due to the
consignee)
11 Consignment Stock A/C Dr 1,400
To Consignment to Mangalore A/C 1,400
(Being the value of consignment stock brought
into account)
12 Consignment to Mangalore A/C Dr 1,990
To Profit and Loss A/C 1,990
(Being the profit on consignment transferred to
profit and loss A/C)
13 Bank A/C Dr 4,440
To Giridhar’s A/C 4,440
(Being the sight draft received from the consignee
for the final balance)
14 Goods sent on consignment A/C Dr 8,750
To Purchases A/C 8,750
(Being the final balance in goods sent on
consignment transferred to purchase A/C)

Calculation of consignment stock

Cost price of consignment stock [(10,000-¼) = 2,500-½= 1,250] 1,250
(+) Proportionate non-recurring expenses incurred by the consignor 125
700+300= 1,000
10,000 1,000
1,250 ?
(+) Proportionate non-recurring expenses incurred by the consignee 25
10,000 200
1,250 ? _____
Value of consignment stock 1,400

Ledger A/C- Home work

Journal entries in the books of Giridhar of Mangalore (Consignee)

Date Particulars Debit Credit
1 Sridhar’s A/C Dr 6,000
To Bills payable A/C 6,000
(Being the bills payable issued to the consignor as
on advance)
2 Cash A/C Dr 7,000
Consignment Debtors’s A/C Dr 5,000
To Sridhar’s A/C 12,000
(Being the cash and credit sales effected)
3 Sridhar’s A/C Dr 100
To Bank A/C 100
(Being the expenses paid on goods returned)
4 Sridhar’s A/C Dr 500
To Bank A/C 200+300 500
(Being the expenses paid)
5 Sridhar’s A/C Dr 960
To Commission A/C 960
(Being the commission due from the consignor)
6 Sridhar’s A/C Dr 4,440
To bank A/C 4,440
(Being the final balance remitted to the consignor
by sight draft)

Ledger A/C- Consignor’s A/c- Home work

 2. 1,000 bicycles were consigned by Roy of Kolkata to Nu of Rangoon at an invoice cost
of ₹150 each. Roy paid freight ₹10,000 and insurance ₹1,500. During the voyage 100
bicycles were totally damaged by fire and had to be thrown overboard. Nu took delivery
of the remaining bicycles and paid ₹14,400 for customs duty.
Nu sent a bank draft to Roy for ₹50,000 as advance payment and later sent an account
sale showing that 800 bicycles were sold at ₹220 each. Expenses incurred by Nu on
Godown rent and advertisement, etc. amounted to ₹2,000. Nu is entitled to a
commission of 5% on sales.
Prepare the necessary ledger accounts in the books of Roy, assuming that nothing was
recovered from the insurers due to a defect in the policy.
Solution:
Remaining bicycle= 1,000-100= 900
In the books of Roy
Dr Consignment A/C Cr
Particulars Amt Particulars Amt
To goods sent on consignment 1,50,000 By Abnormal loss 16,150
1,000×₹150 By Nu’s A/C (gross sale) 1,76,000
To Bank A/C 800×₹220
Freight 10,000 By Consignment stock A/C
Insurance 1,500 11,500 (value of closing stock) 17,750
To Nu’s A/C 14,400
(Custom duty)
To Nu’s A/C 2,000
(Godown rent &
advertisement)
To Nu’s A/C 8,800
1,76,000×5%
To Profit and Loss A/C 23,200
(Balancing figure)
2,09,900 2,09,900

Calculation of goods destroyed by fire (Abnormal loss)

Cost of 100 bicycle damaged in transit (100×₹150) 15,000
(+) Proportionate non-recurring expenses incurred by the consignor
11,500 1,000
? 100 1,150
(+) Proportionate non-recurring expenses incurred by the consignee Nil
(Loss was incurred before reaching the consignee) ______
Value destroyed by fire 16,150
Calculation of consignment stock
Cost of 100 bicycle in stock (1,000-100-800) (100×₹150) 15,000
(+) Proportionate non-recurring expenses incurred by the consignor
11,500 1,000
? 100 1,150
(+) Proportionate non-recurring expenses incurred by the consignee
14,400 900
? 100 1,600
Value of closing stock 17,750

Dr Nu’s A/C Cr
Particulars Amt Particulars Amt
To Consignment A/C 1,76,000 By Bank A/C 50,000
By Consignment A/C 14,400
By Consignment A/C 2,000
By Consignment A/C 8,800
By balance c/d 1,00,800
1,76,000 1,76,000
To balance b/d 1,00,800

Dr Consignment stock A/C Cr

Particulars Amt Particulars Amt
To consignment A/C 17,750 By balance c/d 17,750
17,750 17,750
To Balance b/d 17,750

Dr Goods sent on Consignment A/C Cr

Particulars Amt Particulars Amt
To Purchases A/C 1,50,000 By Consignment 1,50,000
A/C
1,50,000 1,50,000

Dr Abnormal loss A/C Cr

Particulars Amt Particulars Amt
To Consignment A/C 16,150 By Profit and Loss A/C 16,150
16,150 16,150
 3. Hari consigns to Madhu 40 cases of goods at a cost of ₹5,000 per case and incurs the
following expenses in connection with the same, viz., cartage ₹940, freight ₹3,480 and
insurance of ₹12,500. On arrival of the goods, Madhu pays clearing charges ₹3,120,
cartage ₹960 and Godown rent ₹200. 6 cases are destroyed by fire and a sum of ₹30,000
is realised from the insurance company by the way of compensation. Out of the
remaining 34 cases, 24 cases are sold at a total price of ₹2,20,000.
Madhu is entitled to any ordinary commission of 5% and 2% del credere commission
on sales in addition to reimbursement of expenses incurred. He sends to Hari an
Account sales together with a bank draft for the balance due to Hari. In the Books of
Hari, show Consignment account indicating the profit or loss on consignment and
Madhu’s Account. Also pass the journal entries in the books of Madhu.
Solution:
In the books of Hari
Dr Consignment A/C Cr
Particulars Amt Particulars Amt
To goods sent on consignment 2,00,000 By Bank A/C (Insurance 30,000
40×₹5,000 claimed)
To Bank A/C By Abnormal loss 2,538
Cartage 940 By Madhu’s A/C 2,20,000
Freight 3,480 (Sales)
Insurance 12,500 16,920 By Consignment stock A/C 55,430
To Madhu’s A/C
Clearing charges 3,120
Cartage 960
Godown rent 200 4,280
To Madhu’s A/C
Commission
2,20,000×5% 11,000
Del Credere
2,20,000×2% 4,400 15,400
To Profit and loss A/C 71,368
3,07,968 3,07968

*It is assumed that the loss by the fire has occurred in transit.
Calculation of abnormal loss
Cost of 6 cases destroyed by fire (6×₹5,000) 30,000
(+) proportionate non-recurring expenses incurred by the consignor
16,920 40
? 6 2,538
Value of goods lost 32,538
(-) Compensation received 30,000
Abnormal loss 2,538

Calculation of consignment stock

Cost of 10 cases (40-6-24= 10×₹5,000) 50,000
(+) proportionate non-recurring expenses incurred by the consignor
16,920 40
? 10 4,230
(+) proportionate non-recurring expenses incurred by the consignee
(3,120+960) 4080 34
? 10 1,200
Value of closing stock 55,430

Dr Madhu’s A/C Cr
Particulars Amt Particulars Amt
To consignment A/C 2,20,000 By consignment A/C 4,280
By consignment A/C 15,400
By Bank A/C (Final 2,00,320
balance)
2,20,000 2,20,00

Journal entries in the books of Madhu

Date Particulars Debit Credit
1 Hari’s A/C Dr 4,280
To Bank A/C 4,280
(Being the expenses paid)
2 Bank A/C Dr 2,20,000
To Hari’s A/C 2,20,000
(Being the cash sales made)
3 Hari’s A/C Dr 15,400
To Commission A/C 15,400
(Being the commission due)
4 Hari’s A/C Dr 2,00,320
To Bank A/C 2,00,320
(Being the final balance paid)
 7. Jyothimal of Kolkata, consigned 50 cases of cotton piece goods costing ₹20,000 each
to Ziauddin of Dacca. Jyotimal paid the following expenses in connection with the
consignment: Carriage ₹2,500, Freight ₹19,000 and loading charges ₹3,500. Ziauddin
sells 30 cases at ₹3,500 each and incurs the following expenses: Landing charges
₹3,000, warehousing and storage ₹5,000 and packing and selling expenses ₹4,000. It is
found that 2 cases have been lost in transit, and 3 cases are still in transit. Ziauddin is
entitled to a commission of 10% on gross sales. Draw up the Consignment Account in
the books of Jyothimal, and Jyothimal’s Account in the books of Ziauddin.
Solution:
In the books of Jyothimal
Dr Consignment A/C Cr
Particulars Amt Particulars Amt
To Goods sent on consignment 1,00,000 By Abnormal loss 5,000
A/C 50×₹2,000 By goods in transit A/C 7,500
To Bank A/C By Ziauddin’s A/C 1,05,000
Carriage 2,500 30×₹3,500
Freight 19,000 By Consignment Stock 38,500
Loading charges 3,500 25,000
To Ziauddin A/C
Landing charges 3,000
Warehouse 5,000
Selling expenses 4,000 12,000
To Ziauddin A/C
1,05,000×10% 10,500
To Profit and Loss A/C 8,500
1,56,000 1,56,000

Calculation of abnormal loss

Cost of 2 cases lost in transit 2×₹2,000 4,000
(+) proportionate non-recurring expenses incurred by the consignor
25,000 50
? 2 1,000
Value of cases lost in transit 5,000

Calculation of goods in transit

Cost of 3 cases in transit 3×₹2,000 6,000
+) proportionate non-recurring expenses incurred by the consignor
25,000 50
? 3 1,500
Value of 3 cases in transit 7,500

Calculation of consignment stock

Cost of 15 cases (50-30-2-3= 15×₹2,000) 30,000
(+) proportionate non-recurring expenses incurred by the consignor
25,000 50
? 15 7,500
(+) proportionate non-recurring expenses incurred by the consignee
3000 45 (50-2-3)
? 15 1,000
Value of closing stock 38,500

In the books of Ziauddin

Dr Jyothimal’s A/C Cr
Particulars Amt Particulars Amt
To bank A/C By Bank A/C 1,05,000
Landing charges 3,000
Warehouse 5,000
Selling expenses 4,000 12,000
To Commission A/C 10,500
To Balance c7d 82,500
1,05,000 1,05,000
By balance b/d 82,500
 8. On 1-4-2016, Arun Furniture Mart of Mangalore consigned to Aparna Furniture Mart
of Madikeri, 100 tables costing ₹250 each at a proforma invoice price which is 20%
above cost. They paid ₹20,000 for packing and insurance.
Aparna Furniture Mart received the tables and paid ₹1,000 for carriage. They sold 70
tables at an average price of ₹500 per table. And their selling expenses being ₹800. On
30th September, 2016, they remitted the balance by a bank draft deducting their
expenses and commission on sales which was fixed at:
a. 10% on the invoice price plus
b. 20% of the amount realised in excess of the invoice price.
Prepare Consignment Account and Account of Aparna Furniture Mart in the books of
Arun Furniture Mart and Arun Furniture Mart’s Account in the books of Aparna
Furniture Mart.
Solution:
Calculation of Proforma invoice price
Cost price of goods consigned 100×250 25,000
(+) Profit 20% on cost 25,000×20% 5,000
Proforma invoice price of goods consigned 30,000
Loading charges 250×20%= 50

In the books of Arun Furniture Mart

Dr Consignment A/C Cr
Particulars Amt Particulars Amt
To goods sent on consignment 30,000 By Aparna Furniture Mart 35,000
To Bank A/C 2,000 Sales 70×₹500
Packing and insurance By Consignment stock A/C 9,900
To Aparna Furniture Mart A/C 1,000 By Goods sent on consignment 5,000
Carriage (Loading charges)
To Aparna Furniture Mart A/C 800 (100×₹50)
Selling expenses
To Aparna Furniture Mart A/C 4,900
Commission
To Consignment stock reserve 1,500
(Loading charges)
(30×₹50)
To P&L A/C 9,700
49,900 49,900

Calculation of commission due to consignee

10% on the invoice price
Invoice price= 250+20%= 300
70×₹300= 21,000×10% 2,100
20% of the amount realised in excess of the invoice price
Excess of invoice price 500-300=200
70×₹200= 14,000×20% 2,800
Total commission 4,900

Calculation of consignment stock

Proforma invoice price of 30 tables 30×₹300 9,000
(+) proportionate non-recurring expenses incurred by the consignor
2,000 100
? 30 600
(+) proportionate non-recurring expenses incurred by the consignee
1,000 100
? 30 300
Value of closing stock 9,900

Dr Aparna Furniture Mart A/C Cr

Particulars Amt Particulars Amt
To consignment A/C 35,000 By Consignment A/C 1,000
(Carriage)
By Consignment A/C 800
(Selling expenses)
By Consignment A/C 4,900
(Commission)
By Bank A/C 28,300
35,000 35,000

In the books of Aparna Furniture Mart

Dr Arun Furniture Mart A/c Cr
Particulars Amt Particulars Amt
To Bank A/C (Carriage) 1,000 By Bank A/C 35,000
To Bank A/C (Selling expenses) 800
To commission 4,900
To Bank A/C (Final balance) 28,300
35,000 35,000
 11. Excel Chemicals Ltd. Consigned to National Chemical Co. 2,000 Kgs of a chemical.
The cost of chemical and freight thereon were ₹18 and ₹1 per Kg respectively. An
account sale was received from the consignee showing 1,000 Kgs were sold at ₹32 per
Kg. Sales expenses amounted to ₹1 per Kg., insurance ₹1,000, brokerage at 10% and
consignee’s commission at 2½%. They also reported a shortage of weight of 40 Kgs on
the whole consignment, which was due to inherent quality of the chemical. Show the
Consignment Account and Consignee’s Account in the books of the Consignor.
Solution:
In the books of Excel Chemical Ltd.
Dr Consignment A/C Cr
Particulars Amt Particulars Amt
To goods sent on consignment 36,000 By National Chemical Co. A/C 32,000
(2,000×₹18) (1,000×₹32)
To Bank A/C (2,000×₹1) 2,000 By Consignment sock A/C 18,612
To National Chemical Co. A/C
Sales expenses 1,000
(1,000×₹1)
Insurance 1,000
Brokerage 3,200 5,200
(32,000×10%)
To National Chemical Co. A/C 800
(Commission) 32,000×2.5%
To P&L A/C 6,612
50,612 50,612

Calculation of consignment stock

Cost of 2,000 Kgs of chemical (2,000×₹18) 36,000
(+) Non recurring expenses of consignor (2,000×₹1) 2,000
(+) Non recurring expenses of consignee Nil
Value of stock available for sale (2,000-40) 1,960 38,000

Consignment stock = 1,960-1,000= 960 Kgs.

1,960 38,000
960 ? = ₹18,612

Dr National Chemical Co. A/C Cr

Particulars Amt Particulars Amt
To Consignment A/C 32,000 By Consignment A/C 5,200
By Consignment A/C 800
 By balance c/d 26,000
32,000 32,000
To balance b/d 26,000

14. Nandini Limited Mysore consigned 10,000 Kgs of ghee to Anita of Bangalore on 1-4-
2018. The cost of ghee was ₹20 per Kg. Nandini Limited paid ₹5,000 towards freight
and insurance. During transit 250 Kgs were accidentally destroyed for which the
insurance company paid directly to the consignor ₹4,500 in full settlement of the claim.
Anita took delivery of the consignment on 10-4-2018. On 30-6-2018, Anita reported
that 7,500 Kgs. were sold at ₹30 per Kgs. The expenses being Godown rent ₹2,000,
advertisement ₹2,500 and salesman’s salary ₹5,000.
Anita is entitled to a commission of 4% including 1% del credere. A customer who had
purchased 1,000 Kgs. was able to pay only 80% of the amount due from him. Anita
reported a loss of 100 Kgs. due to leakage. Assuming that Anita paid the amount due
by draft, prepare necessary accounts in the books of both the consignor and the
consignee.
Solution:
In the books of Nandini Limited, Mysore
Dr Consignment A/C Cr
Date Particulars Amt Date Particulars Amt
1.4.18 To Goods sent on 2,00,000 1.4.18 By abnormal loss 5,125
consignment 30.6.18 By Anita’s A/C 2,25,000
(10,000×₹20) (7,500×₹30)
1.4.18 To Bank A/C 5,000 30.6.18 By Consignment
(Freight & stock 44,532
insurance)
30.6.18 To Anita’s A/C
Rent 2,000
Advert 2,500
Salary 5,000 9,500
30.6.18 To Anita’s A/C
Commission
2,25,000×4%=9,000
Del credere
2,25,000×1%=2,250 11,250
30.6.18 To P&L A/C 48,907
2,74,657 2,74,657

Calculation of abnormal loss

Cost of 250 Kgs of ghee lost in transit (250×₹20) 5,000
(+) Proportionate non-recurring expenses incurred by the consignor
10,000 5,000
250 ? 125
Value of goods lost in transit 5,125

Calculation of consignment stock

Cost of ghee available for sale × quantity of ghee in stock
Quantity of ghee available for sale

Calculation of cost of ghee available for sale

Cost of goods consigned 2,00,000
(+) Non-recurring expenses incurred by the consignor 5,000
(+) Non-recuring expenses incurred by the consignee Nil
2,00,000
(-) Value of ghee lost in transit 5,125
Value of ghee available for sale 1,99,875

Calculation of quantity of ghee available for sale and in stock

Quantity of ghee consigned by the consignor 10,000
(-) Quantity of ghee lost in transit 250
9,750
(-) Quantity of ghee lost due to leakage 100
Quantity of ghee available for sale 9,650
(-) Quantity if ghee sold by the consignee 7,500
Quantity of ghee in stock 2,150

Value of consignment stock= 1,99,875 × 2,150= 44,532

9,650

Dr Abnormal loss A/C Cr

1.4.18 To consignment A/C 5,125 1.4.18 By Bank A/C 4,500

By P&L A/C 625
 5,125 5,125

Anita’s A/C- Home work

In the books of Anita

Nandini Limited A/C- Home work

Dr Commission A/C Cr

30.6.18 To Bad debts 6,000 30.6.18 By Commission A/C 11,250

1,000×₹30×20%To
30.6.18 P&L A/C 5,250
11,250 11,250

22. Nagaraj of Kolkata consigned 100 radio sets costing ₹500 each to Ramlal of Patna. The
invoice was made proforma at ₹600 per set. Ramlal was entitled to a commission of
7½% on sales plus 2½% del credere commission and 10% of any profit that may
remain on the basis of the invoice price. Ramlal was to bear all expenses incurred after
the goods reached his Godown.
While sending the goods, Nagaraj paid ₹1,500 as forwarding expenses and insurance.
In transit 10 radio sets were damaged and Nagaraj received ₹4,000 from the Insurance
company. Ramlal took delivery of the remaining sets paying ₹4,500 as freight cartage,
etc. Ramlal sold 70 radio sets at ₹800 each, 30 of them on credit, out of which the
proceeds of 3 radio sets could not be recovered because of the disappearance of the
customers. He had ₹500 as storage and selling expenses. Ramlal sent a bank draft for
the amount due to Nagaraj.
Show the important ledger accounts in the books of both the parties.
Solution:
In the books of Nagaraj
Dr Consignment A/C Cr
Particulars Amt Particular's Amt
To goods sent on consignment 60,000 By Bank A/C 4,000
100×₹600 By abnormal loss 1,150
To Bank A/C 1,500 By Ramlal’s A/C 56,000
To Ramlal’s A/C 4,500 70×₹800
To Ramlal’s A/C By consignment stock 13,300
 Commission 4,200 By goods sent on consignment 10,000
56,000×7.5% 100×₹100 (600-500)
Del Credere 1,400 Proforma-cost
56,000×2.5%
Surplus 1,400
Inv 70×₹600=42,000
56,000-42,000=14,000
14,000×10% 7,000
To Stock reserve 2,000
20×₹100
To P&L A/C 9,450
84,450 84,450

Calculation of abnormal loss

Cost price of 10 radio damaged 10×₹500 5,000
(+) non-recurring expenses by consignor
1,500 100
? 10 150
5,150
(-) compensation received 4,000
Abnormal Loss 1,150

Calculation of consignment stock

Invoice price of 20 radio (100-10-70=20) 20×₹600 12,000
(+) non-recurring exp of consignor
1,500 100
? 20 300
(+) non-recurring exp of consignee
4,500 90
? 20 1,000
Consignment stock 13,300

Ramlal’s A/C - Balancing figure transfer to Bank A/C

Consignment stock A/C
Abnormal loss A/C
Dr Goods sent on consignment A/C Cr
Particulars Amt Particulars Amt
To consignment A/C 10,000 By consignment A/C 60,000
To Purchase A/C 50,000
60,000 60,000

Dr Stock reserve A/C Cr

Particulars Amt Particulars Amt
To balance c/d 2,000 By consignment A/C 2,000
2,000 2,000
By Balance b/d 2,000

In the books of Ramlal

Nagaraja’s A/C
Commission A/C- Bad debts- 3×₹800=2,400 – Debit side