CONSIGNMENT SALES

A consignment sale is an arrangement whereby the owner of the goods transfers the possession of the same to a third
party, the agent, so the latter may sell it to customers.
The owner is the consignor, and the agent or seller is the consignee. The inventory under consignment must be
reported by the consignor and not by the consignee. The sales must be recorded by the consignor upon notification
by the consignee.
Types of cost incurred in consignment arrangement:
1. Costs that are inventoriable – added to the cost of inventories.
2. Costs that are expensed outright – expensed as incurred.
Method of accounting for the consignment profit by the consignor:
1. Profits merged together for all consignees.
2. Profits determined for each consignee.