BM2012

NAME: SECTION: SCORE:

PRACTICE EXERCISE

In 20x1, Seth Wholesalers transferred goods to a retailer on consignment. The goods cost P225,000 and are
normally sold at a 50% mark-up. Seth paid P5,000 freight cost, while the retailer paid P4,000 advertising and
P1,500 freight cost. The parties agreed that Seth Wholesalers would reimburse the cost of advertising and
freight paid by the retailer. During the year, the retailer sold 70% of the merchandise at the normal mark-up.
The retailer withheld a 12% commission from payment plus the amount reimbursable by the consignor.

REQUIRED:

1. Net income recognized by Seth Wholesalers ____________

2. Amount remitted by the retailer ____________
3. Value of unsold inventory ____________

In December, the Millennial Publishing Company ships 20 sets of books to a book dealer on consignment.
The consignor maintains a cost accounting system and perpetual inventories; the cost of manufacturing each
set is P3,000. At the end of December, the dealer reports the sale of seven (7) sets at P5,000 each and remits
the sales proceeds less 15% commissions and P1,500 for freight paid by the dealer on the receipt of the sets.
Delivery and installation expense was P1,200.

REQUIRED:
4. Amount remitted by the consignee ____________
5. Net income recognized by consignor ____________

Performance Indicators Points

Correct accounts and amounts used 3
Computed final amounts are correct/balanced 2
Total 5

08 Activity 1 *Property of STI

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