Reference no: EM132953768
1. Define 'Consignment'. What is the difference between a consignment and a sale of goods?
2. Why goods are sent to consignee at invoice price? What adjustment entries are recorded in the books of the consignor to find profit on consignment when goods are invoiced at prices?
3. Give journal entries in respect of consignment transactions in the books of consignor and consignee.
4. Write short notes on:
a) Del Credere Commission
b) Treatment of normal and Abnormal Losses in Consignment
Account
c ) Valuation of Unsold Stock in Consignment
5. On 1st July, 2006 Radio House of Delhi consigned 200 Radios to Banerjee Bros. of the Calcutta. The cost of each radio was Rs. 400. Radio House paid Rs. for freight and insurance. On 7 July, 2006 Banerjee Bros. accepted a 3 months bill drawn upon them by Radio House for Rs., Banerjee Bros. paid Rs. 2,200 as rent and Rs. for advertisement and upto 31st December, 2006 (on which date Radio House close their books) they sold 180 radios at Rs. 500 each. Banerjee Bros. were entitled to a commission of on sales.
Give Journal entries and prepare necessary accounts to record the above transactions in the books of the parties.
6. Arun sends goods on consignment to Seemu. The terms are that Seemu will receive 10% commission on the price (which is cost plus 25%) and 20% of any price realised above the invoice price. Seemu will meet his expenses himself, goods to be sent freight paid.
Arun sent goods whose cost was Rs. and spent Rs. 1,500 on freight, forwarding, etc. Seemu accepted a bill for Rs. Immediately on receiving the consignment. His expenses were Rs. 200 as rent and Rs. 100 as insurance. Seemu sold ¾ of the goods for Rs. 19,500. Part of the sales were on credit and one customer failed to pay Rs. 400. Give Consignment Account and Seemu's Account in the books of Arun and Arun's Account in the books of Seemu.
7. Dutt of Delhi makes sewing machines at a cost of. On 1st January, 1994 he consigned of them, invoice price to Khan at Madras to be sold on behalf of Dutt, Khan receiving a commission of 8% on Sales plus 2% Del credere and 10% of any profit that may remain on the basis of invoice price. Khan was to bear all expenses after the machines reach his godown. Dutt incurred Rs. 500 as forwarding expenses and insurance.
10 machines were damaged during transit for which Dutt received Rs. 1,050 from insurers. Khan took delivery of remaining machines paying Rs. 1,140 as freight, octroi duty, cartage, etc. (Subsequently he also paid Rs. 500 as storage and other charges).
Khan sold 160 machines @ Rs. 180; 100 of them on credit out of which the proceeds of 5 machines could not be received because of the disappearance of the customer. Khan remitted the amount due to Dutt.
You are required to prepare the Consignment to Madras A/c and Khan's
A/c in Dutt's Books.
Q Suresh and Co. of Bombay sent on consignment to Mahesh & Co. of Delhi 60 cases cutlery goods costing Rs. 175 per case. Expenses incurred by the consignor at Bombay were: Freight Rs., insurance Rs. 55 and loading charges Rs.
Suresh & Co. draw on Mahesh & Co. 2 months bills at sight for Rs. which the latter accepts. The charges paid by Mahesh & Co. at Delhi were unloading Rs. 30, Storage Rs. 85, insurance Rs. 15, Commission is payable to Mahesh & Co. at 2% on all sales in addition to 1½% del credere commission.
The consignee sells for prompt cash 30 cases @ Rs. 225 per case; 25 cases @ Rs. 250 per case and the balance @ Rs. 280 per case. The account was settled immediately by means of a bank draft.
Write up the transactions and ledger accounts in the books.