Chapter 10

Problem I
1. The journal entries shown below would be made on the consignors and consignees
books (assume the use of perpetual inventory):
Transactions
Shipment of goods
on consignment.

2. Payment of
expenses by
consignor.
3. Payment of
expenses
by consignee.
Advances by
Consignor

Entries on Consignors Books

(Herbalife Supplier)
Inventory on
Consigment
60,00
Finished
0
Goods
60,00
Inventory*....
0

Entries on Consignees Books

(Conrado Enterprises)

Inventory on
Consignment..
Cash..

No entry

Inventory on
Consignment
Consignee
Payable
Cash
Advances from
Consignee..

Sale of merchandise

No entry.

6. Notification of sale
to consignor and
payment of cash
due.
Commission:
10% x P48,000 =
P4,800

Commission
expense
Advances from
Consignee
Cash.
Consignee
Payable
Consignment
Sales
Revenue..

No entry
(memorandum
entry only)

600
600
Consignor
Receivable
2,400

2,400
Cash.

3,360
3,360

4,800
3,360
37,44
0
2,400
48,00
0

Advances to
Consignor
Cash
Cash
Consignor
payable
Consignor
Payable..
Commission
Revenue..
Consignor
Receivable
..
Cash
Advances
from
Consignee

7. To record cost of
goods sold and
related costs.
** (P60,000 + P600
+
P2,400) x =
P31,500

Cost of goods
sold**
Inventory on
Consignment

2,400

2,400
3,360
3,360
48,00
0

48,00
0

48,00
0
4,800
2,400
37,44
0
3,360

31,50
0
31,50
0

*if periodic method is used, the credit should be consignment shipments account treated
as reduction in the Costs of goods available for sale to arrive at Cost of Goods Sold Available
for Regular Sale.
2. The remittance amounting to P37,440 can be determined by preparing the Account Sales
as follows:
Sold for the Account of:

Jingka Juice
Sales (60 sachets of herbal goods)
Charges:
Finishing costs..
Commission (P48,000 x 10%)..
Due to Consignor.
Less: Advances.
Balance
Remittance Enclosed
Balance Due
Items on Hand (50 sachets of herbal goods): P60,000 x
50%

P48,000
P 2,400
4,800

P30,000

Problem II
1. The account sales:
Sold for the Account of:
AA Company
Sales (8 sets @ P24,000)
Charges:
Freight-in
Advertising expense
Deliveries and installation expenses
Repairs expense on units sold..
Commissions, 25% of sales
Due to Consignor.
Less: Advances.
Balance
Remittance Enclosed
Balance Due
Items on Hand
Items Returned (defective)..

7200
P40,800
3,360
P37,440
37,440
P
0

P
192,000
P 6,000
2,400
9,600
4,800
48,000

70,80
0
P121,200
0
P121,200
30,000
P 91,200
15 sets
2 sets

2. The inventory on consignment amounted to P189,000 computed as:

Charge Analysis
Sales
Inventor
Total
(8 sets)
y
(25 sets)
(15 sets)
Charges by consignor:
Cost of consigned goods
(@P12,000/set)
P 96,000 P180,000 P 300,000
Freight-out (P9,000/25 sets = P360 per
3,600*
5,400
9,000
set)
Charges by consignee:
Freight-in (P6,000/25 sets =P240 per
2,400*
3,600
6,000
set)
Advertising expense..
2,400
0
2,400
Delivery and installation
9,600
0
9,600
Repairs expense
4,800
0
4,800
Commissions [25% of sales (8 sets x
P24,000 per set]
48,000
0 ___48,000
Total
P166,800 P189,000
P379,800

* Freight on sets returned is charged against sales of the period.

** Normally, the term freight-out is synonymous to delivery expense which is
classified as selling expenses if we are dealing with a third party. But, for consignment
accounting where the transfer of merchandise if from consignor to consignee, the
usage of the term freight-out does not construed to be a selling expense but still an
inventoriable cost (which is part of freight-in).
The consignment net income amounted to P25,200 computed as:
Consignment Sales (8 sets x P24,000 per set)
Less: Costs and expenses:
Charges by Consignor:
Cost of consigned goods @P12,000/set)
P 96,000
Freight-out (P9,000/25 sets = P360 per set)
3,600*
Charges by consignee:
Freight-in (P6,000/25 sets =P240 per set)
P 2,400*
Advertising expense..
2,400
Delivery and installation
9,600
Repairs expense
4,800
Commissions [25% of sales (8 sets x P24,000 per set]
48,000
Net Income
Problem III
Summit Electronics Company
Inventory on Consignment (800 @ P570)
Finished Goods Inventory

456,000

Consignment Expense (P368,000 x 30%)

Accounts Receivable--Consignee Sales
Sales RevenueConsignment (P920 x 400)

110,400
257,600

Cost of Consigned Goods Sold (P570 x 400)

Inventory on Consignment

228,000

Cash [(P920 x 70%) x 380]

Accounts Receivable--Consignee Sales

244,720

P 192,000

99,600

67,200
P 25,200

456,000

368,000
228,000
244,720

Farley Hardware
No entry upon receipt of consigned merchandise.
Cash (P920 x 400)
Consignor Payable
Commission Revenue

368,000

Consignor Payable
Cash

244,720

257,600
110,400

49. Seahawks, Inc. had the following consignment transactions during December:

244,720

Inventory shipped on consignment to Ashe Company

Freight paid by Seahawks
Inventory received on consignment from Fenn Company
Freight paid by Fenn

P18,000
900
12,000
500

Multiple Choice Problem

1. c P1,200
Commission = 25% x Sales price
P400 = 25% x Sales price
Sales price = P400 25% = P1,600
Number of units sold = Selling price
= __P1,600__
Price per tape
P200 per tape

= 8 tapes

Sales .. P1,600
Less Commission of consignee...
400
Amount remitted by Beta View Store...P1,200
2. a P 370
Total
Charges
(25)
Consignors charges:
Cost
Freight-out
Consignees charge - Commission
Total
Sales price
Consignment profit

P2,500
75
__400__
P2,975

Charges Related to
Consignment
Inventory on
Sales
Consignment
(8)
(15)
P800
30
__400__
1,230
_1,600_
_P370_

P1,500
45
_______
_P1,545_

3. a P1,545 (refer to No. 2 for computation)

4. b
Sales (P2,250 / 15%)
Divided by: Selling price per unit
Number of units sold

P15,000
P 1,000
15 units

Sales
Less Charges:
Commission
Advertising
Delivery expense
Due to Consignor
Less: Advances
Value of note sight draft: (100 beds x P600 per bed) x
60%
Multiplied by: Proportional number of beds sold
Amount remitted

P15,000

5. c
P 2,250
1,500
___750

__4,500
P10,500

P36,000
15/100

__5,400
P 5,100

6. d P1,500
Sales
Less Charges:
Consignors charge:
Cost of beds (P600 per bed x 15 beds)
Consignees charges:
Commission
Advertising
Delivery expense
Consignment net income
7. a no items were sold in November;
Sales (unknown)
Less Charges:
Commission
Remittance

P15,000
9,000
P2,250
1,500
___750

15% x
P 27,200

x 15%x = P27,200
85%x = P27,200
x = P32,000
8. c P16,800
Sales (unknown)
Less Charges:
Advertising
Delivery and installation
charges
Commission (unknown)
Remittance

x
P500
100
20%x

_______
P 12,840

x (P500 + P100 + 20%x) = P 12,840

x 20%x = P12,840 + P600
80%x = P13,440
x = P16,800
9. b- P6,080
Cost (P150 per unit x 40 units)
Freight on shipment (P200 x 40/100)
Cost of inventory on consignment
10. c - 6
Sales (unknown)
Less Charges:
Commission (unknown)
Advertising
Delivery and installation
Cartage on consigned goods
Remittance
x (20%x + P1,000 + P600 + P500) = P21,900
x 20%x = P21,900 + P2,100
80%x = P24,000
x = P30,000

P6,000
80
P6,080
x
20%x
P1,000
600
500
P21,900

__4,500
P1,500

Number of units sold = _P30,000_

=6
P5,000 per set
11. b P2,300
Total
Charges
(10)
Consignors charges:
Cost
Freight-out
Consignees charges:
Commission (20% x P30,000)
Advertising
Delivery and installation
Cartage
Total
Sales price
Profit on Consignment

Charges Related to
Consignment
Inventory on
Sales
Consignment
(6)
(3)

P30,000
2,500

P18,000
1,750

P9,000
750

6,000
1,000
600
__500__
P40,600

6,000
1,000
600
__350__
27,700
_30,000_
__P2,300__

__150__
_P9,900_

12. d None of the above (P9,900) refer to No. 11 for computation.

13. No answer available - P17,625
Sales (Sales x 20%) P600 P390 P210 = P12,900
.8 Sales = P14,100
Sales = P17,625.
14. a (P270 x 50) + [(P600 80) x 50] = P13,875.
AA Sales - Nos. 15 to 17:
15. a
Gross collection (P15,000 x 70% x 80%)

P
8,400
__168
P 8,232

Less: Cash discount taken by customer (P8,400 x 2%)

Net collection
Less Charges:
Expenses
Commission (P8,400 x 15%)
Due to Consignor
Less: Advances
Amount remitted

P 800
_1,260

__2,060
P 6,172
_6,000
P 172

16. b
Total
Charges
(100%)
Consignors charges:
Cost
Freight
Consignees charges:
Expenses
Commission (15% x P10,500)
Cash discount (P10,500 x 80% x

Charges Related to
Consignment
Inventory on
Sales
Consignment
(70%)
(30%)

P10,000
120

P 7,000
84

800
1,575
168

800
1,575
168

P 3,000
36

2%)
Total
Sales price (70% x P15,000)
Profit on Consignment

P12,663

P 9,627
_10,500_
P
873

_P9,900_

17. b refer to No. 16 for computation

RR Products Company Nos. 16 to 18
16. c
Collection made pertaining to:
May sale
Down payment (3 x P50)
Monthly payment thereafter (3 x P10)
June sale
Down payment (1 x P50)
Total
Less: Commission (P230 x 20%)
Amount remitted

P 150
30

P 180
___50
P 230
___46
P 184

17. d P140
Total
Charges
(5)
Consignors charges:
Cost
Freight
Consignees charges:
Commission
Total
Sales price (4 units x P250/unit)
Profit on Consignment

Charges Related to
Consignment
Inventory on
Sales
Consignment
(4)
(1

P 775
50

P 620
40

P 155
10

200
P1,025

200
P 860
_ 1,000
P 140

____
P165

18. b refer to No. 17 for computation

19. b
Collection made:
Cash sale (P1,500 x 2)
Credit sale (P1,800 x 25%)
Total
Less: Charges
Freight
Commission [(P3,000 + P1,800) x 15%]
Amount remitted

P 3,000
___450
P3,450
P 320
__720

__1,040
P 2,410

20. a
Total
Charges
(5)
Consignors charges:
Cost

P4,000

Charges Related to
Consignment
Inventory on
Sales
Consignment
(3)
(2)
P 2,400

P 1,600

Freight
Consignees charges:
Freight
Commission
Total
Sales price
Profit on Consignment

200

120

320
720
P5,240

80

192
720
P 3,432
4,800
P 1,368

128
______
P1,808

21. b P1,808 refer to No. 20 for computation

22. d 244,600
Sales on credit (14,000 per unit x 12 units) + (13,000 x 10)
Less: Sales allowance granted
Bad debts
Commission [2% x (P298,000 P2,000)]
Amount still due from BB, Inc

P298,000
P 2,000
7,000
_44,400

__53,400
P
244,600

23. d P67,280
Total
Charges
(30)
Consignors charges:
Cost
Freight-out
Consignees charges:
Sales allowance
Bad debts
Commission
[15% x (P298,000 P2,000)]
Total
Sales price [P14,000 per unit x 12
units)
+ (P13,000 per unit x 10 units)]
Consignment profit

Charges Related to
Consignment
Inventory on
Sales
Consignment
(22)
(8)

P240,000
1,800

P176,000
1,320

2,000
7,000

2,000
7,000

44,400
P295,200

44,400
P230,720

P64,000
480

_P64,480_

298,000
P 67,280

24. d refer to No. 23 for computation

25. b 395
Sales (unknown)
Less Charges:
Commission (unknown)

__x__ P10
P100
__P45__

Delivery expense
Remittance
x-

[( _x__ ) P10 + P45 ]

100

x _P10x_ = P35,550
P100

= P35,505

)
________
P35,505

P100x P10x = P3,555,000

P90x = P3,555,000
x = P39,500
Number of ballpens sold = _P39,500_
= P395
P100 per unit
26. b
Sales
Cost of sales
Gross profit
Operating expenses:
Commission (P30,000 x 5%)
Freight-in (P260 x
P19,500*/P26,000)
Others
Regular (P15,150 x
P19,500/P26,000)
Consignment
(P15,150 x P30,000/P150,000)
Total
Net profit

Regular Sales
P120,000
84,000
P 36,000

*P26,000 P6,500 = P19,500

27. d P5,775 (refer to No. 26 for computation)

28. a (P18,000 + P900) = P18,900
Theories
1 d
.
2 d
.
3 a
.
4 c
.

Consignmen
t Sales
P30,000
19,500*
P10,500

Total
P150,000
103,500
P 46,500

P 1,500
1,950

P 1,500
1,950

3,030
P 4,725
P 5,775

3,030
_P16,845_
P29,655

12,120
_______
P 12,120
P 23,880