Consignment accounts

Problem 1: Sharma & Co. of Delhi consign goods costing Rs. 40000 to their agent, Agrawal of Nagpur, on which they pay freight insurance and charges Rs. 2500, drawing on him at 90 for Rs. 30000. They discount the bill at bank being charged Rs. 300 therefore, after two months they received from their agent an Account Sales informing that the entire consignment has been sold for Rs. 55000, that expenses amounting to Rs. 900 have been incurred and showing as a deduction the agreed commission of 2% on the amount realized. A draft on the state bank of India was enclosed for the balance due. Show the journal entries and important ledger accounts in books of both the parties. Problem 2: Goswami sent on the consignment 500 toys to Gpoal at a cost price of Rs. 40 each. Goswami paid Rs. 800 for the packing and freight and Rs. 200 for insurance in transit. Goswami received by a cheque Rs. 5000 from gopal as an advance against the consignment. Afterwards Goswami received an account sales from Gopal in which following details were shown: 1. Gopal has incurred Rs. 150 as Octroi duty, Rs. 60 for carriage and Rs. 500 as advertising and selling other expenses. 2. Gopal has sold all the toys at a price of Rs. 55 each. 3. Gopal has charged commission at 5% on the gross sale proceeds. Goswami received a bank draft alongwith the account sales for the balance due from gopal. Pass the journal entries and open necessary accounts in the books of the consigner and consignee. Problem 3: Nilkaml Co. Ltd., Bombay sent on Consignment 1000 plastic chairs at cost price of Rs. 250 each to Ramswami of Chennai. The company paid Rs. 2000 as freight and Rs. 1000 as insurance premium while sending the chairs to Ramswami. Ramswami was entitled to a commission at 6% on the gross sale proceeds. Nilkamal Company drew a bill of exchange of Rs. 60000 on Ramswami as an advance against the consignment. Ramswami accepted the bill and returned to the company which discounted the bill with its bankers for Rs. 59600. At the end of the year an Account Sales was received from Ramswami in which following details were shown: 1. 750 chairs sold by Ramswami for Rs. 240000 2. Expenses incurred by Ramswami were: Dock charges Rs. 350 Carriage Rs. 550 Selling expenses Rs. 800 3. Commission charged by Ramswami at the agreed rate. A Bank Draft for Rs. 140000 was enclosed with the account sales by Ramswami. Pass the necessary journal entries in the books of Nilkamal Co. Ltd. and Ramswami also prepare the ledger Accounts in the books of the company.

Problem 4: Bharat Petroleum Ltd., Consigned 6000 litres of petrol to Verma Oil of Raipur at Rs. 26 per litre. The Company paid for freight and insurance Rs. 6000. Verma Oil received the consignment and incurred selling expenses Rs. 2500. The consignee sent an Account Sales mentioning a sale of 5000 litres at Rs. 30 per litre and remitted the amount due by a draft after deducting his expenses and commission @ 5%. He also reported that petrol in hand was 950 litres. Pass the Journal entries and open necessary accounts in the books of Bharat petroleum Ltd. Problem 5: Malik of Mumbai consigned 800 calculators to Patel of Surat at a cost price of Rs. 200 each. Malik incurred Rs. 1250 by way of packing and freight charges and Rs.350 for insurance in transit. When Patel took delivery at Surat, he found that 40 calculators were stolen. He immediately informed Malik about this and Malik submitted to the insurance company a claim for compensation. The insurance company paid Rs. 6500 to Malik by way of compensation. Patel sold 500 calculators at a price of Rs. 280 each. Patel spent Rs. 120 for carriage, Rs.980 for Octroi duty and Rs. 300 for advertising. Patel charged commission at 8% on the gross sale proceeds and after deducting his expenses and commission, he sent the balance to Malik by a bank draft. Pass the Journal entries in the books of Malik and Ledger Accounts in the books of both the parties. Problem 6: M/s. Vidarbha Traders of Amravati dent on Consignment 100 table fans at cost price of Rs. 400 to M. P. electrical of Bhopal. M/s. Vidarbha Traders spent Rs. 800 for freight and Rs. 400 for insurance in transit. As per the terms of agreement M.P. Electricals was entitled to receive 7% ordinary commission on all sales and 1% del credere commission on credit sales and effected by him. When M.P. Electricals took delivery at Bhopal, he found that 5 table fans were damaged in transit. He informed M/s. Vidarbha Traders about this and M/s. Vidarbha Traders claimed compensation from insurance company. The insurance company admitted a claim for only Rs. 400 as compensation for the damages. Afterwards M/s. Vidarbha Traders received a Account sales from M.P. Electricals in which the following details were shown: 1) Expenses incurred by M.P. Electicals were Rs. 200 for carriage, Rs. 680 for Octroi duty and Rs. 840 for selling expenses. 2) M.P. Electricals has sold 5 damaged table fans at Rs. 250 each on credit basis. He has also sold other 65 table fans at a price of Rs. 550 each of which 25 table fans has been sold for cash. 3) M.P. Electricals has charged commission at agreed rates. M.P. Electricals enclosed a bank draft for the balance payable to M/s. Vidarbha Traders. Out of the credit sales effected by M.P. Electricals, Rs. 800 turned out to be bad debts. Pass the journal entries and the Ledger Accounts in the books of M/s. Vidarbha Traders and M.P. Electricals. Problem 7: Vijay, whose accounting year ends on 31/5/2002, consigned 100 bags of wheat, each bag costing Rs. 300 to Rohan of Delhi on 1/4/2002. He had paid Rs. 500 towards freight and insurance 15 bags were in transit and on 6/4/2002 the consigner has received Rs. 1000 on account of the damaged bags from the Insurance Company.

Rohan took delivery of the goods on 10th April, 2002 and immediately accepted a bill drawn on him for Rs. 20000 for 60 days. On 31/5/2002 the consignee reported that: i) 70 bags were sold at Rs. 350 per bag; ii) The damaged bags were sold at Rs. 110 per bag; and iii) He had incurred the following expenses: Godown rent Rs. 700 Clearing charges Rs.1000 Carriage outwards Rs. 300 He is entitled to a commission at 10% on the sale proceeds of all goods excepting damaged goods. Assuming that Rohan remits the balance by bank draft on 31/5/2002. Show Consignment Accounts and Consignees Account in the books of Vijay. Problem 8: Ashoka Mills, Nagpur consigned 5000 kgs of Vanaspati Ghee to M/s. Sarita & Co. of Patna. Each kg. ghee costs Rs. 40. Ashoks mills paid Rs. 500 as carriage, Rs. 2500 as freight and Rs. 600 as insurance in transit. During the transit 500 kgs were accidentally destroyed for which the Insurance Company paid directly to the Consignor Rs. 13000 in full settlement of the claim. After three month from the date of the consignment of the goods to Patna, M/s. Sarita & Co. reported that 3500 kgs of ghee was sold @ Rs. 55 per kg. and expenses being: on godown rent Rs. 1000 and on Salesman Salary Rs.750. M/s. Sarita & Co. are entitled to a commission on sales. M/s. Sarita & Co. also reported a loss of 20 kgs. due to leakage. Prepare necessary Ledger Accounts in the books of both the parties. Problem 9: Kumar brothers of Nagpur sent on consignment 800 bed sheets at an invoice price of Rs. 80 each to M/s. Raj and Sons of Nanded. The invoice price of the bed-sheets is fixed by taking 20% profit on the invoice price. Kumar Brothers paid Rs. 300 for packing, Rs. 800 for freight and Rs. 200 for insurance while sending the bed sheets to M/s. Raj and Sons. Kumar brothers drew a bill of Rs. 8000 for 22 months on M/s. Raj and Sons as an advance against the consignment which was duly accepted by M/s. Raj and Sons. Kumar Brothers discounted the bill for Rs. 7840. M/s. Raj and Sons sent an account Sales to Kumar Brothers at the end of the year. The Account Sales included the following information:1. M/s. Raj and Sons has incurred expenses as under: Octroi duty Rs. 600 Carriage Rs. 300 Sellers Salary Rs. 500 2. M/s. Raj and Sons has sold 650 bed sheets at a price of Rs. 100 each. 3. M/s. Raj and Sons has charged commission at an agreed rate of 8% on the gross sale proceeds. M/s. Raj and Sons sent a bank draft for the balance payable to Kumar Brothers. Prepare Ledger Accounts in the books of Kumar Brothers and M/s. Raj and Sons. Problem 10:

M/s Vinayak Agencies of Nasik sent consignment of 2000 boxes of dry fruits costing Rs. 500 per box to M/s Kalyani Traders, Nagpur, and paid railway freight Rs. 15000, carting Rs. 4000 and other expenses Rs. 30000. The goods were charged at pro-forma invoice price so as to show a profit of 20% on sales. Consignee is entitled to a commission of 8% on total sales and 3/2% Del-credere commission on credit sales. He accepted a bill of Rs. 250000 out of which cash sales were for 1. 1400 boxes were sold for Rs. 820000 out of which cash sales were for Rs. 500000. 2. Expenses incurred: Advertisement Rs. 8500 Discount Rs. 6000 Other Expenses Rs. 3500 3. Commission is charged as per terms. M/s Kalyani Traders sent a bank draft for Rs. 440000 along with Account Sales. Prepare: (a) Consignment account, Consignees account and Consignment Stock Reserve Account in the books of M/s Vinayak Agencies. (b) Consignors Account and Debtors Account in the books of M/s Kalyani Traders. Problem: 11 Vishal Traders Mumbai consigned to M/s Ali & Sons Nagpur 80 ceiling fans costing Rs. 600 each at 20% above cost and paid Rs. 400 for insurance, Rs. 800 for carriage and Rs. 600 for other expenses. M/s Ali & Sons accepted a bill for Rs. 18000 and issued a cheque for Rs. 4000 after receiving the consignment. Vishal traders discounted the bill for Rs. 17800 and in due course received an account sales showing the following details: 1. Credit Sales of 40 ceiling fans at Rs. 750 each. 2. Cash Sales of 25 fans at Rs. 800 each 3. Expenses incurred by M/s Ali & Sons: Godown Rent Rs. 650 Carriage Rs. 850 Commission Rs. 2500 4. M/s Ali & Sons took 5 fans for their own use at an agreed of Rs. 740 each. 5. M/s Ali & Sons received Rs. 29000 from the debtors, allowed Rs. 600 as discount and incurred bad debts Rs. 400. 6. M/s Ali & Sons remitted the balance due by a bank draft sent with the account sales. Pass the journal entries in the books of both the parties and prepare: i) Consignment Account in the books of Vishal Traders. ii) Vishal Traders account in the books of M/s Ali & Sons. Problem 12: Singh cotton traders of Amravati consigned 300 bales of cotton to Shri Satpal of Delhi on `1/1/2001. The cost price was Rs. 900 per bale but the consignment invoice was made out at figure to show a gross profit of 2% on sales. Shri Satpal reported on 31/3/2001 that he had sold of the consignment at profit of 25% on sales and he incurred Rs. 1500 as freight charges and Rs. 900 as godown rent. Singh cotton traders spent Rs. 1000 as expenses in dispatching goods

Shri satpal was entitled to commission of 6% on sales and 3% on the net proceeds (i.e. sales less his expenses and commission) as bonus. On 31/3/2001 Shri satpal sent a bank draft for the amount due from him. Prepare the Ledger Accounts in the books of singh cotton traders and Shri Satpal. Problem 13: Bansilal and company of agra consigned 1000 tins of pure ghee costing Rs. 80 per tin to their agent Rane ghee stores Mumbai. The invoice price of the ghee was kept Rs. 100 per tin. The agents sold for cash 400 tins @ Rs. 100 and 600 tins @ Rs. 105 on credit. Bansilal and company paid Rs. 800 as freight and Rs. 400 for sundry expenses. They drew a three months bill of Rs. 50000 on Rane ghee stores which was sent to Bansilal and Co. after acceptance. Rane ghee store sent: Carriage Rs.120 Octroi \ Rs. 80 Storage Rs. 180 Sundry Expenses Rs. 240 Rane Ghee stores are entitled to get a commission of 5% and 2% del crede commission on total sales. He sent his account sales to Bansilal and Co. One month after all debtors except one for Rs. 400 paid their due amount to Rane ghee stores. You are required to prepare: i) Consignment account Consignees Account in the books of Consignor. ii) Consignor Account Commission account, debtors account and Bad debts account in the books of consignee. Problem 14: Renuka Garments of Raipur sent 300 Ready-made shirts on consignment to Ambika Agencies of Amravati. Renuka Garments spent Rs. 1200 on packing and insurance. The cost of each shirt was Rs. 200 but it was invoiced 20% above the cost. 30 shirts were lost in transit and Insurance Company admitted a claim for Rs. 3000 only. Ambika Agencies paid freight Rs. 1400, carriage Rs. 400, Octroi Rs. 200, Godown Rent Rs. 240. Abmika agencies sold 220 shirts for Rs. 360 each on credit. Ambika Agencies was entitled to a commission at 5% on invoice price and 20% of any excess realized on the invoice price and 2% of Del credere commission. Ambika Agencies accepted a bill drawn by Renuka Garments for Rs. 38000 and remitted the balance by draft along with an Account Sales. You are required to prepare necessary Ledger Accounts in the books of Renuka Garments and Ambika Agencies.

Problem 15: On 10/6/2000 Ahuja and Company Consigned 5000 tape cassettes costing Rs. 20 each to Rathi and Co., the Consignee. The Proforma Invoice is prepared to show a profit on sales price at the rate of 20%. The consignee is not allowed to sell cassettes below the invoice price. The Consignor paid freight and insurance Rs. 2500. On 28/6/2000 the consignee on receiving the goods paid for outward carriage Rs. 550. He also accepted the bill drawn by the consignor Rs.50000 for the 3 month period.

On checking the goods received he found that 100 cassattes were damaged and not fit for sale. This fact was reported to the consignor. The consignor claimed for damages and the insurance company settled the claims for Rs. 1500. On 30/7/200 the consignee reported the consignor as below: 1. Half of the goods received were sold at rs. 30 per unit. 2. One-fourth of the goods received were sold at invoice price. 3. The balance in stock. The Consignee was to receive a commission at the rate of 3% on sales at invoice price and at the rate of 2% on sales above invoice price. Show the necessary Ledger Accounts in the books of both the parties. Problem 16: Insaf Ali & Co. of Allahbad consigned 100 pressure cookers to M/s. Bande Ali of Nagpur. The goods were invoiced at Rs. 300 so as to yield a profit of 50% on cost. Insaf Ali& Co. incurred Rs. 2000 on freight and insurance. M/s. Bande Ali incurred Rs.1000 on clearing and cartage and Rs.1600 on rent. M/s. Bande Ali sold 50 pressure cookers for cash at Rs. 320 per cooker and 20 cookers on credit Rs. 350 per cooker. He retained his commission at the rate of 6% (including 1% for the del credere arrangements) and remitted the balance due. M/s. Bande Ali informed that 10 cookers were damaged on account of bad packing and that he would be able to sell them only Rs. 160 per cooker. A debtor for Rs. 2000 to whom the goods were sold by M/s. Bande Ali became insolvent and only 50 paise in a Re. was recovered. Prepare: 1. Consignment account consignee account goods sent on consignment account and consignment stock account in the books of Insaf Ali and Co. 2. Consignors account and consignment debtors account in the books of M/s Bande ali.