QUIZ-CONSIGNMENT

PROF ZENAIDA VERACRUZ- MANUEL

A. THEORY. Letter choices on the date column of your worksheet.

1. The consignment in account was credited for P12,000 and the consignment out was
credited for the same amount . This represents revenue earned from consignment. From
whose viewpoint is the second statement correct?
a)
From both consignee and consignor c) From consignor only
b)
From consignee only.
d) some deductions from both should be made first
2. If all consigned goods were sold, a debit balance in the consignment out account
represents
a) consignment loss
c) inventoriable cost
b) deferred costs
d) advances received
3. If consignor allowed consignee to sell on account, in consignors book this is recorded as
a) due from consignee
c) inventoriable cost
b) deferred cost
d) due to consignor
4. Consignor paid freight on goods consigned. If goods are unsold, freight should be part of
a) expenses
c) inventoriable cost
e) both b) and c)
b) balance of consignment out d) balance of consignment in f) b), c and d) are correct
5. Principle of matching is applied to which of the following costs?
a) Installation
c) commission
e) none of the aforementioned costs
b) delivery
d) all
6. Goods on consignment including freight and insurance are inventoriable cost of
a) consignor until it is sold c) both consignee and consignor
b) consignee until it is sold d) neither consignee nor consignor
7. Consignor recognizes revenue when consigned goods are
a) shipped to consignee
c) sold by consignor to consignee
b) received by consignee
d) included in the account sales
8. The title Merchandise Shipment on Consignment is closed in consignors book at the end
of the accounting period to determine
a) total cost of goods sold
c) total cost of goods shipped
b) regular cost of goods sold
d) total cost of goods returned
9. If consignee did not make a full remittance, which account will have a debit balance?
a) Consignment In
c) Due From Consignee
b) Consignment Out
d) Both a) and c)
10. Consigned goods while in the hands of the consignee should be
a) deducted from consignors available for sale
c) added to consignors inventory
b) added to consignees inventory
d) recorded as Due from Consigne
PROBLEMS (Problems A and D on the left side of the worksheet. Problems B and C on
the right side.
A. (RPCPA EXAM) Aircon Inc. consigned 12 one-horse power air-condition units to Argy
Trading and paid P2,000 freight out. Gross margin is 25% of selling price which was set
for P12,000. The consignee is allowed a commission of 5% on sales but is required to give
an advance payment to be deducted proportionately based on sales made. Argy Trading

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account sales on December 2015, gave a remittance for 6 units sold after deducting selling
expenses of P800, delivery and installation of P1,200 and the appropriate commission and
advances.
Required: 1. Prepare an account sales.
2. Entries in the books of the consignor. Consignment profit is determined
separately.
3. Reclassifying entry(s) of consignor, if any.
B. Henry Inc. sells piano for Key Inc. on consignment basis. His ledger postings show among
others the following account:
Freight and Insurance
(10 pianos)
Delivery
Commission
Freight for 3 pianos returned

Consignment In - Key Inc.

Sales (3)
P3, 500 Returns (3)
300
6,300
1,050

P21,000

Just before the year ended in 2015, Henry made only an 80% remittance of the total
amount due. Sales price is 100% above cost. Key paid P2,750 shipping cost for the
shipment.
Required:
1) Entries in the book of the consignee to record only a) remittance and b)
reclassification for reporting purposes.
2) All entries in the books of the consignor. Support with a table analyzing for cost of
total shipment, goods sold, goods returned, goods sold.
3) Give the proper presentation of the balances in the balance sheet of
a) consignee and b) consignor.
C. REFER TO PROBLEM B. Two more units were sold on January2016. Related expenses
needed were incurred by Henry and full remittance was made.
Question 1: How much will be remitted?
Question 2: How much is Keys consignment profit or loss?
Question 3: How much is inventoriable cost of Key?
D. Moran Appliances consigned on November 5 five electric fans costing P800 each to Dizon
Marketing Company, which was to sell them at any price above P1,000. The amount over
P1,000 will represent consignee's commission. Moran paid the trucking cost of P200 and
is to reimburse Dizon for local delivery to customers. During December, Dizon Marketing
sold three fans, two for cash at P1,500 each and one on credit at P1,800 of which it had
collected 50%. Dizon paid P170 for local delivery to customers. Full remittance is
required within a month from the time goods are sold.
Question 1: Assuming that Dizon Marketing made interim settlement as of December 15,
how much should it remit to Moran Appliances?
Question 2: How much is the profit to date of Moran Appliances resulting from the
consignment?
Question 3: How much is the profit to date of Dizon?
QUIZ-CONSIGNMENT

152

PROF ZENAIDA VERACRUZ- MANUEL

SOLUTION
1.C

2. A

3A

4A

5E

6D

7.D

8.B

9C

11. C

Prob A
PROBLEMS
1. Sales (6 x 12,000)
Less:
Selling
Installation
Commission
Balance
Less:
Advances
Due for remittance
Units on Hand
2,

Entries (Consignor)
a.
Consignment Out Argy
Merchandise Shipment on consignment

5,600
66,400
6,000
60,400
6

108,000

Consignment Out T. Nippon

Cash

2,000

Cash
Advances from Consignee

3.

72,000

800
1,200
3,600

12,000

Cash
Advances
Consignment Out
Consignment Out T. Nippon

60,400
6,000
5,600

Consignment Out
Consignment Profit

11,400

Reclassifying entry:
Merchanise Inventory-Consignment
Deferred Consignment Expenses
Consignment Out (unsold including freight)
This should close the consignment out account.
Sales
Cost of Sales (72,000 x 75%)
Commission
Selling Expenses
Delivery & Installation
Freight (2,000 x 6/12)
Net Profit

Prob B
1. Balance of the consignment in represents amount for remittance
Remittance 80% of P9850= P7,880
Due to consignor 20%= P1,970
1) Consignment In -Key Inc.
Cash

54,000
1,000

P54,000
3,600
800
1,200
1,000

108,000
2,000
12,000

72,000
11,400

55,000
P72,000

60,600
P 11,400

P9,850

7,880

7,880

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2) Consignment In
Due to Consignor

1,970

b) Entries in the Books of Consignor

Consignment Out Henry Inc.
Merchandise Shipment on Consignment
(21,000/3 = 7,000 /200% = 3,500 x 10)

35,000

Consignment Out Henry Inc.

Cash

7,880
11,150
1,970

Merchandise Shipment on Consignment

Consignment Out

10,500

Consignment Loss
Consignment Out

Cost
Shipping Cost
Freight
Delivery
Commission
Freight

2,750

21,000
10,500

900

Total
35,000
2,750
3,500
300
6,300
1,050
48,900

Sales
Less charges for goods sold
Expenses for goods returned
Consignment Loss

4 Unsold
14,000
1,100
1,400

3 Returns
10,500
825
1,050

16,500

1,050
13,425

P18,975
2,925

900
3 Sold
10,500
825
1,050
300
6,300
18,975

P21,000
21,900
P 900

Reclassifying entry:
Reclassifying entry:
Merchanise Inventory-Consignment
Deferred Consignment Expenses
Consignment Out (unsold including freight)

14,000
2,500

3) Consignees Balance Sheet Current Liability-Due to Consignor

C. 1) Sales (2x 7,000)

Less:
Delivery Expenses to be reimbursed
Commission
Balance to be remitted from addtl sales
Due to Consignor previous swales
Total

16,500

P 1,970

Consignors Balance Sheet Current Assets: Due from Consignee

Merchandise Inventory-Consignment
Deferred Consignment Expenses

154

35,000

2,750

Cash
Consignment Out Henry Inc.
Due from Consignee
Consignment Out Henry Inc.

Table

1,970

14,000
(200)
(4,200)
9,600
1,970
P11,570

P 1,970
14,000
2,500

2) Sales
Less:

COS (2 x 3,500)
Shipping Cost
Commission
Freight
Delivery Expense
Profit of Moran Appliance

3) Inventory- Consignment
Deferred Consignment Expenses
Consignment Out debit balance
D.

a)

For remittance (3 x 1,000)

Less:
Delivery Expenses
Balance to be remitted

b) Sales
Less:

c)

7,000
550
4,200
700
200

14,000

12,650
P 1,350

P7,000
1,250
P8,250
3,000
170
2,830

COS (3 x 800)
Trucking Cost (3/5 x 200)
Delivery Expense
Profit of Moran Appliance

2,400
120
170

Sales (1,500 x 2 = 3,000 + 1,800)

Less:
Contract Price (3 x 1,000)
Profit of Dizon representing commission

4,800
3,000
1,800

3,000
2,690
P 310

Exercise 4
4.

a.

Sales (80 x 25,000)

Less:
Commission
Advertising
Del. & Inst.
Cartage
Freight
Balance
Less check endorsed
Balance still due
Returns

* 2,050,000
307,500
3,500
750
1,500
1,250

Balance still due

Remittance
Total
Less charges except commission
Net after 15% commission
Divide by
Total Sales

b.
Commission
Advertising

93,000
1,642,500
1,735,500
7,000
1,742,500
85%
P2,050,000

Consignment in White Power House

307,500 Consignment Sales
3,500

314,500
1,735,500
1,642,500
P 93,000
5 sets

/25,000 = 82, units sold

2,050,000

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Del. & Inst.

Cartage
Freight
Remittance
Merchandise shipped
Freight
Commission
Advertising
Del. & Inst.
Cartage
Freight
Profit
c)

750
1,500
1,250
1,642,500
Consignment Out Eternal Power Block
1,800,000 2,050,000
Consignment Sales
1,500
60,000
Ret. Merchandise
300,000
3,500
750
500
250
748,940

Analysis of Cost and Expenses

Charges of Consignor
Cost of Merchandise
Freight
Charges of Consignee
Freight On Return
Del. & Inst.
Cartage
Commission
Advertising
Total

(150)
Total
1,800,000
5,500

60,000.00
183.33

1,250
750
1,500
307,500
3,500
2,120,000

1,250.00

d) Sales
Less:

Charges rel.ated to sets sold

Expenses related to return
Consignment Profit

c)

(63)
Sets Unsold

(82)
Sets Sold

756,000
2,310

50.00

630.00

________
61,483.33

_________
758,940.00
1,299,576.67
1,483.33

984,000
3,006.67
750.00
820.00
307,500
3,500.00
1,299,576.67
2,050,000.00
1,301,060.00
748,940.00

Entries on books of consignee

Received 150 generators from White Power House to be sold at P25,000 each for 15%
commission, expenses reimbursable.
Consignment In White Power House
Cash
Consignment Receivable
Cash
Consignment In White Power House
Cash
Consignment Receivable
Returned 5 Generators to White Power House
Consignment In White Power House
Cash
Consignment In White Power House
Cash

156

(5)
Sets Ret.

5,750
1,025,000
1,025,000
932,000

1,250
1,642,500

5,750

2,050,000
932,000

1,250
1,642,500

Books of Consignor
Consignment Out Eternal Power Block
Merchandise shipment on consignment
Consignment Out Eternal Power Block
Cash
Cash
Due from Consignee
Consignment Out Eternal
Consignment Out Eternal
Merchandise Shipment on Consignment
Consignment Out Eternal
Consignment Out
Consignment Profit or Loss

1,800,000
5,500

1,642,500
93,000
314,500
60,000
748,940

1,800,000
5,500

2,050,000
60,000
748,940

157