CONSIGNMENT ACCOUNT

PROBLEM - 2

Active of Dhaka sent a consignment of goods to Strong of Rajshahi on the basis that Strong was to effect sales on behalf of Active and receive a commission of 20% on the selling price.

Strong was responsible for all expenses at his end. The commission was considered to include del credere commission also.

Active sent the goods costing Tk. 25000. He spent Tk.300 on the packing and forwarding. On receiving the goods, Strong accepted Active’s draft for Tk.20000 and paid the following expenses:

Railway Freight (Dhaka to Rajshahi) Tk. 450
Godown Rent Tk. 300
Insurance (Godown) Tk. 150
Miscellaneous Tk. 75

He sold 80% of the goods for Tk.38000. There was a bad debt of Tk. 1000.


Requirement:

Give journal entries in the books of the both the parties and prepare important ledger accounts.

CONSIGNMENT ACCOUNT


PROBLEM - 1

X, whose accounting year ends on 31st May each year, consigned 100 cases of medicine costing Tk. 3,000 each to Y of Rajshahi on 1.4.2006.

He paid Tk. 5,000 towards freight and insurance.

15 cases were damaged in transit and on 30.5.2006 the consignor received Tk. 10,000 on account of the damaged cases from the insurance company.

Y took delivery of the goods on 10.4.2006 and immediately accepted a bill drawn on him for Tk. 200,000 for 60 days.

On 30.5.2006, the consignee reported that:
(i) 75 cases were sold at Tk. 4,500 per case; and
(ii) He incurred the following expenses: Godown rent Tk. 4,000; Clearing charges Tk. 8,500; Carriage outwards Tk. 3,000.
(iii) He is entitled to a Commission of 10% on the sale proceeds.

Y remits the balance by bank draft on 30.5.2006.

Requirements:
1. Give the journal entries in the books of X and Y.
2. Show the ledger accounts in the books of X and the personal account of X in the books of Y.

PROBLEM - 3

Wali sent 1000 lbs. of certain chemicals to Ahmed to be sold on consignment basis. The terms were that Ahmed would get 5% commission plus 2% del credere commission and would be reimbursed for expenses incurred.

The cost to Wali was Tk. 25 per lb. He incurred Tk.200 as packing and forwarding charges. On receipt of the chemicals Ahmed accepted a bill for Tk. 15000. Ahmed also paid Tk.500 as freight and cartage and Tk.300 as rent and insurance.

Ahmed sold 750 lbs. at Tk.35 per lb. One third of total sales were on credit. One customer failed to pay the amount of Tk.1000 due from him. Ahmed remitted the due amount to Wali.

Requirements:

1. Give the journal entries in the books of Wali and Ahmed.
2. Show the Consignment Account and Ahmed’s Account in the books of Wali and various important ledger accounts in the books of Ahmed.