AKNKAILASH

THAKUR
INSTITUTE
CONSIGNMENT

BY CA PANKAJ GOEL

CONSIGNMENT

CONSIGNMENT.
When owner sends goods to his agent for the purpose of selling then it is called
consignment.
It is different from sale in that the consignee cannot dispose off the goods according to
his choice; does not receive any risk from the consignor; can return the goods if not
marketable.
In consignment accounting there are 3 accounts:
Consignment account; which shows goods/stock at cost including expenses incurred
in sending the goods.
Consignee/consignor account; which is net of his selling price and the non-recurring
or direct expenses incurred by him.

Goods Sent On Consignment Account

Closing stock is valued at cost/invoice price + proportionate amount of cost incurred by

consignor in transporting.
If goods are lost in transit the same method of costing is applied and that amount is
credited to the consignment account.
Nominal losses are proportionately charged to all stock whether sold or not.
Abnormal loss is directly charged to P&L a/c.

Apart From Fixed Rate Of Commission On The Goods Sold An Addition Del Credere
Commission Is Paid To The Consignee For bad debts and overriding commission for
selling at higher price.

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CONSIGNMENT

Section A:NUMERICAL QUESTIONS ON CONSIGNMENT

1. X of Calcutta sent on 15 January, 2007, a consignment of 500 bicycles costing Rs. 1,000 each.
Expenses of Rs. 7,000 met by the consignor.Y of Bombay spent Rs. 15,000 for clearance and the
selling expenses were Rs. 100 per bicycle.Y sold on 4 April, 2007, 300 bicycles @ Rs. 1,600 per
bicycle and again on 20 June, 2007, 150 bicycles @ Rs. 1,720.Y was entitled to a commission of
Rs. 250 per bicycle sold plus one-fourth of the amount by which the gross sale proceeds less total
commission theron exceeded a sum calculated @ Rs. 1,250 per bicycle sold.Y sends the amount
due to X on 30 June, 2007.You are requested to prepare the Consignment Account and Ys
account in the book of X.Ans:(93100)
Calculation of Additional Commission
Let Additional commission be = x
x = 1/4 [Gross Sale Proceeds Total Commission Minimum Amount]
x = 1/4 [7,38,000 (1,12,500 + x) (1,250 450)
x = 1/4 [7,38,000 1,12,500 x 5,62,500]
x = 1/4 (7,38,000 6,75,000 x)
x = 1/4 (63,000 x) =
Multiplying the equation by 4, we get,
4x = 63,000 x
5x = 63,000 = x = 12,600=

1. Chandani Boutique of Jaipur sent 1,000 pieces of Sanganeri printed Bed Sheets @ Rs. 130 per
piece on consignment sale to Suresh Totla & Co. of Surat. The consignor paid Rs. 3,000 for
freight and transit insurance. 100 bed sheets were damaged in trasit due to fire. The consignee sold
700 bed sheets @ Rs. 200 per bed sheet on cash. The consignee spent Rs. 2,000 on godown rent,
Rs. 1,200 on insurance, and Rs. 1,000 on clearing expenses. The salvage value of damaged goods
was estimated at Rs. 800. The Insurance company paid Rs. 13,000 for the claim. The consignee is
entitled to a commission of 10% on sale.Prepare consignment account and abnormal loss account
in the books of Chandni Boutique.(Ans:28922)
Abnormal Loss Account
Consignment Account
Profit & Loss Account

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Rs.
13,300
500
13,800

Bank (Insurance Co.)

Salvage Value of Stock

Rs.
13,000
800
13,800

CONSIGNMENT

Section B:JAM ON CONSIGNMENT

1. Which of the following statement is not true:

( a)If del-creders commission is allowed, bad debt will not be recorded in the books of
consignor
(b) If del-creders commission is allowed, bad debt will be debited in consignment
account
(c) Del-creders commission is allowed by consignor to consignee
(d) Del-creders commission is generally relevant for credit sales

2. The owner of the consignment stock is________

(a) Consignor
(b) Consignee
(c) Debtors
(d) None

3. X of Kolkata sends out goods costing 300,000 to Y of Mumbai at cost + 25%on cost.
Consignors expenses Rs 5000. 1/10th of the goods were lost in transit. Insurance claim
received Rs 3000. The net loss on account of abnormal loss is
(a) Rs.27,500
(b) Rs.25,500
(c) Rs.30.500
(d) Rs.27,000

4. X sent out certain goods to Y of Delhi. 1/10 of the goods were lost in transit. Invoice value
of goods lost Rs 12,500. Invoice value of goods sent out on consignment will be:
(a) Rs.120,000
(b) Rs.125,000
(c) Rs.140,000
(d) Rs.100,000

5. If del-credere commission is allowed for bad debt, consignee will debit the bad debt
amount to:
(a) Commission Earned A/c
(b) Consignor A/c
(c) Debtors A/c
(d) General Trading A/c

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6.

7. Rahim of Kolkata sends out 1000 boxes to Ram of Delhi costing Rs 100 each at an
Invoice Price of Rs 120 each. Goods send out on consignment to be credited in general
trading account will be:
a. Rs.1,00,000
b. Rs.1,20,000
c. Rs.20,000
d. None

8. Goods

sent

out

on

consignment

Rs.2,00,000.

Consignors

expenses

Rs.5,000.Consignees expenses Rs.2000. Cash sales Rs.1,00,000, credit sales

Rs.1,10,000.Consignment stock Rs.40,000. Ordinary commission payable to consignee
Rs.3,000.Del-credere commission Rs.2000. The amount irrecoverable from customer
Rs.2,000.What will be the profit on consignment?
a. Rs.38,000
b. Rs.40,000
c. Rs.36,000
d. Rs.43,000

9. A of Kolkata sends out 500 boxes to B of Delhi costing Rs 200 each. Consignors
expenses Rs 5000. 1/5th of the boxes were still in transit. 3/4th of the goods received by
consignee, were sold. The amount of goods still in transit will be:
a. Rs.20,000

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b. Rs.21,000
c. Rs.21,200
d. None

10. Consignment account is

a. Real account
b. Personal account
c. Nominal account
d. None of the above

11. A proforma invoice is sent by ________

a. Consignee to Consignor
b. Consignor to Consignee
c. Debtors to Consignee
d. Debtors to Consignor

12. Goods costing Rs 2,00,000 sent out to consignee at Cost + 25%. Invoice value of the
goods will be
a. Rs.250,000
b. Rs.2,40,000
c. Rs.300,000
d. None of the above.

13. Commission provided by the consignor to the consignee to promote credit sale is known
as _____________
a. Ordinary commission
b. Del-credere commission
c. Over riding commission
d. Special commission

14. _________ is unavoidable and should be spread over the entire consignment while
valuing consignment stock.
a. Abnormal loss
b. Normal loss
c. Extra-ordinary loss
d. None of the three

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15. Sujal consigned goods costing Rs. 2,50,000 to Mridul on 1st January 2006 by incurring
Rs. 20,000 on freight. Some goods were lost in transit. For remaining goods Mridul spend
Rs. 15,000 to take the delivery including storage charges. During the quarter, Mridul sold
3/4 of the goods received by him for Rs. 3,00,000 and charged commission @10% on it to
Sujal. At the end of the quarter, Sujal asked the details of goods lost, sold, expenses
commission and balance due to him alongwith the consignment stock from Mridul. As
desired, Mridul sent the periodical detail statement commonly known as
a. Account statement
b. Account sales
c. Statement of affairs
d. Summary statement.

16. A consignee sold goods costing Rs. 50,000 at a profit of Rs. 10,000. Out of total sale 30%
was credit sale. As per the agreement the consignee will get 5% ordinary commission, 2%
del-credere commission on credit sale and 3% over-riding commission on gross amount.
The amount of commission will be
a. Rs. 3,540
b. Rs.3,840
c. Rs.4,500
d. Rs.3,000

17. Proforma invoice is a statement of information in the firm of invoice prepared by the
__________to appraise the __________ about certain essential particulars of the goods.
a. Consignee, Consignor.
b. Buyer/Seller.
(c ) Consignor, consignee.
(d) None of the three.

18. Mr. Yatharth consigned to Mr. Ramesh 100 cases of tea costing Rs.100 per case. He paid
Rs.1,000/- as freight and cartage. Mr. Ramesh could take delivery of only 90 cases since
10 cases were loss in transit. The amount of abnormal loss will be
a. Rs.1,000/-.
b. Rs.1,100/-.
c. Rs.1,050/-.

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CONSIGNMENT

d. None of the three.

19. Goods costing Rs.1,20,000 were sent on consignment basis. These goods are invoiced to
give a gross margin of 20% on invoice price. The amount of loading is:
a. Rs.24,000.
b. Rs.30,000.
c. Rs.20,000.
d. None of the above.

20. In case of del-credere commission provided by consignor to consignee, bad debts is a loss
of _________
a. Consignee.
b. Consignor.
c. Both consignor and consignee.
d. Neither of the two.

21. The party who sends the goods for sale on fixed commission basis is __________
a. Consignee.
b. Consignor.
c. Drawee.
d. Drawer.

22. Goods costing Rs10,000 sent out to consignee at Cost + 25%. Invoice value of the goods
will be
a. Rs.12,500.
b. Rs.12,000.
c. Rs.10,000.
d. None of the above.

23. Abnormal loss on consignment is credited to ________

a. Profit and loss account.
b. Consignees account.
c. Consignment account.
d. None of the three.

24. Mr. A consigned goods costing Rs.2,50,000 to Mr. B at an invoice price of

Rs.3,00,000.The goods were to be sold at invoice price or above. Mr. B sold some of the

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CONSIGNMENT

goods at invoice price of Rs.2,00,000 and some at 10% above cost i.e. Rs.1,10,000. For
this he gets 5% commission. The amount of commission is
a. Rs.18,000.
b. Rs.15,000.
c. Rs.12,500.
d. Rs.15,500.

25. 1,000 kg of oranges are consigned to a wholesaler, the cost being Rs.8 per kg, plus Rs.
925 of freight. It is concluded that a loss of 15% is unavoidable. The cost per kg of orange
will be
a. Rs. 9.41.
b. Rs. 10.00.
c. Rs. 10.50.
d. Rs. 8.93.

26. R sends out goods costing Rs.2,00,000 to K. Consignors expenses Rs.5,000.

Consignees expenses in relation to sales Rs 2,000. 4/5th of the goods were sold at 20%
above cost. The profit on consignment will be:
a. Rs.26,000
b. Rs.32,000
c. Rs.26,200
d. Rs.(6,000)

27. Goods costing Rs.1,80,000 sent to consignee to show a profit of 20% on invoice price.
Invoice price of the goods is
a. Rs.2,16,000
b. Rs.2,25,000
c. Rs.2,10,000
d. None of the above.

28. If 1,000 typewriters costing Rs.250 each are sent on consignment basis and Rs.10,000 is
spent for freight etc., 20 typewriters are damaged in transit beyond repair. The amount of
loss will be
a. Rs. 5,000
b. Rs.200
c. Rs.5,200

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CONSIGNMENT

d. None of the above.

29. 1000 Kg. of Mangoes were consigned to a wholesaler, the cost being Rs.3 per kg. plus
Rs.400 freight. Loss of 15% of Mangoes is unavoidable. 750 kgs. were sold by the
consignee. The remaining stock of 100 kg. will be valued at
a. Rs.300.
b. Rs.500.
c. Rs.400.
d. None of the above.

30. Goods costing Rs 5,00,000 sent out to consignee at Cost + 25%. Invoice value of the
goods will be
a. Rs.5,00,000
b. Rs.6,25,000
c. Rs.6,00,000
d. None of the above.

31. A of Agra sends out 500 boxes to B of Delhi costing Rs 200 each. Consignor's expenses
Rs 5,000. 1 /5th of the boxes were still in transit. 3/4th of the goods received by consignee,
were sold. The amount of goods still in transit will be
(A) Rs. 20,000
(B) Rs. 21,000
(C) Rs. 21,200
(D) None

32. 90. X sent out 1000 bags to Y, costing Rs. 200 each. Consignor's expenses Rs. 2,000. Y's
expenses non-selling Rs. 1,000, selling Rs. 2,000. 100 bags were lost in transit. Value of
lost in transit will be (A) Rs. 20,200
(B) Rs. 20,300
(C) Rs. 20,000
(D) Rs. 23,000

33. j\. X sends out 1000 bags to Y of Delhi costing Rs. 2,000 each. 600 bags were sold at 10%
above cost price. Sale value will be(A) Rs. 13,20,000
(B) Rs. 13,00,000
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(C) Rs. 12,00,000

(D) Rs. 14,50,000

34. In valuation of consignment stock only _______ expenses are added

(a) Direct
(b) Indirect
(c) Both (a) and (b)

35. X of Kanpur sends out certain goods at cost + 25%. Invoice value of goods sends out Rs.
2,00,000. 4/5th of the goods were sold by consignee at Rs. 1,76,000. Commission 2%
upto invoice value and 10% on any surplus above invoice value. Commission amount will
be ____
(a) Rs. 4,800
(b) Rs. 5,200
(c) Rs. 3,200
(d) Rs. 1,600
(d) None of the three

36. On 1st Sept. 2006 goods costing Rs. 33,000 were consigned by X to his agent Y at a
proforma price which was cost plus one sixth profit on invoice price. Invoice price of
goods will be___
(a) Rs. 39,000
(b) Rs. 39,600
(c) Rs. 40,000
(d) Rs. 45,000

37. Suresh of Delhi consigned 600 fans to Naresh of Bareilly to be sold on his account and at
his risk. The cost of each fan is Rs. 300. Suresh paid Rs. 6000 as freight and insurance.
Naresh paid Rs. 1500 as Octroi & Cartage; Rs. 3500 for godown rent and Insurance. 500
fans were sold for Rs. 1,80,000. Naresh was entitled to a commission of 4% on sale @ Rs.
350 per fan and 20% of any surplus price realized. Profit on consignment will be
________
(a) Rs. 12,250
(b) Rs. 12,000
(c) Rs. 14,000
(d) Rs. 15,000

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CONSIGNMENT

38. On 1st January, 2005 Badry of Bombay consigned 100 cases (cost price Rs. 7500) at a
proforma invoice price of 25% profit on sales to his agent Anil of Agra. On the same date
Badri paid non recurring expenses of Rs. 600. On 5th Jan. Anil took delivery and paid Rs.
1200 for Octroi. On 31st January he sold 80 cases for Rs. 10500. He charged Rs. 775 as
his commission. Consignment profit will be
(a) Rs. 2285
(b) Rs. 2200
(c) Rs. 2500
(d) Rs. 2000

39. Following figures have been taken from the trial balance of a trader
Opening Stock Rs. 14,500
Purchases Rs. 75,995
Carriage Inward Rs. 1,700
Wages Rs. 825
Sales Rs. 93,750
Goods sent on Consignment Rs. 20,000
Amount of profit will be
(a) 20730
(b) 20500
(c) 20200
(d) 21000

40. Balance of goods sent on consignment account is transferred to (a) Profit & loss account
(b) Trading account
(c) P/L appropriator account
(d) None of the three

41. In case of Del Credere Commission is provided by consignor to consignee, bad debt is a
loss of
(a) Consignee
(b) Consignor

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(c) Both consignor and consignee

(d) Neither of the two

42. 14. The party who sends the goods for sale on fixed commission basis is
(a) Consignee
(b) Consignor
(c) Drawee
(d) Drawer

43. X consigned 100 packets of cosmetics each costing Rs. 300 to his agent at Bareilly.
Hepaid Rs. 500 towards freight and insurance. 15 packets were destroyed in the way.
Consignee took delivery of the remaining packets and spent to 700 as godown rent, Rs.
1,000 as clearing charges and Rs. 300 as carriage inwards. Cost of damage will be
(a) Rs.4500
(b) Rs.4575
(c) Rs.4000
(d) None of the three

44. X consigned 100 packets of cosmetics each costing Rs. 300 to his agent at Bareilly. He
paid Rs. 500 towards freight and insurance. 15 packets were destroyed in the way.
Consignee took delivery of the remaining packets and spent to 700 as godown rent, Rs.
1,000 as clearing charges and Rs. 300 as carriage inwards. The agent sells away 70
packets. Stock amount will be
(a) Rs. 4500
(b) Rs. 4751
(c) Rs. 4651
(d) None of the above

45. It del-credere commission is allowed for bad debt, consignee will debit the bad debt
amount to
(a) Commission earned account
(b) Consignor A/c
(c) Debtors A/c
(d) General trading a/c

46. Commission provided by the consignor to the consignee to promote credit sale is known
as

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CONSIGNMENT

(a) Ordinary commission

(b) Del- Credere commission
(c) Over riding commission
(d) Special commission

47. Sharma of Allahabad sends goods costing Rs. 1,00,000 at an invoice price of the
Rs.1,20,000 to Kalapil of Katak. Sharma incurs the following expenditure in relation to
such consignment:
1. Packing and loading Rs. 5000
2. Transportation Rs. 10000
3. Insurance Rs. 5000
1/10th of the consignment is damaged in transit. Amount of abnormal loss will be
(a) Rs. 14,000
(b) Rs. 10,000
(c) Rs. 12,000
(d) None of the above.

48. 24. Suresh of Delhi consigned 600 fans to Naresh of Agra to be sold on his account and at
his risk. The cost of each fan is Rs. 300 Suresh paid Rs. 6000 as freight and insurance
Naresh paid Rs. 1500 as octroi and cartage. Rs. 2000 as rent; and Rs. 1500 as insurance.
500 fans were sold by Naresh for Rs. 1,80,000 Naresh was entitled to a commission of 4%
on sale @ Rs. 350 per fan and 20% of any surplus price realized.
Consignment profit will be
(a) Rs. 12250
(b) Rs. 12000
(c) Rs. 10000
(d) Rs. 13000

49. M/s Mittal & Sen & Co. sends goods costing Rs. 50,000 to M/s Suneja & Jadeja & Co.for
sale at invoice price. The invoice price of the goods was Rs. 60,000. Former spends Rs.
2,000 on freight for sending the delivery and later spends Rs.1,500 for receiving the
delivery. M/s Suneja & Jadeja & Co sold 90% of goods at invoice price and earned a
commission of Rs.5,400. In the due course he made some credit sales also out of which
some amount were proved to be bad and was borne by him only. Remaining goods were

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taken back by M/s Mittal & Sen & Co. The balance due was paid by M/s Suneja & Jadeja
& Co. through a demand draft. The above transaction is in the nature of
(a) Consignment.
(b) Joint venture.
(c) Sale of goods on sale or return basis
(d) Credit sales.

50. Expenses incurred by the consignor on sending the goods to the consignee is Rs.1,000 for
insurance, Rs.1,500 on freight and Rs.500 on packing the goods. While expenses incurred
by the consignee on behalf of the consignment are Rs.800 on octroi, Rs.600 as godown
charges and Rs. 1,200 as selling expenses. The amount to be excluded while calculating
consignment stock will be
(e) Rs.2,600.
(f) Rs.600.
(g) Rs.1,200.
(h) Rs.1,800

51. Goods costing Rs. 80,000 are consigned by Manjari & Co. to Anjali & Co. for Rs.1,00,000.
Expenses of the consignor in this respect was Rs. 5,000. Consignee spends Rs. 6,000 for
taking the delivery. Some of the goods were returned by the consignee costing Rs.10,000.
The amount to be credited to consignment account for goods returned will be
(i) Rs.12,500.
(j) Rs.11,100.
(k) Rs.11,375.
(l) Rs.13,875.

52. If cost of physical stock on 31.3.2006 is Rs.2,80,000 and out of which stock of Rs.
1,20,000 is held as consignee. Goods costing Rs. 25,000 were damaged beyond repair
and were expected to realize Rs.5,000 only. The value of own stock on 31.3.2006 will be
(m) Rs.2,60,000
(n) Rs.1,60,000
(o) Rs.1,35,000
(p) Rs.1,40,000

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