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366481475 Consignment Sales doc
Accountancy (Bulacan State University)
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QUIZ-CONSIGNMENT
PROF ZENAIDA VERACRUZ- MANUEL
A. THEORY. Letter choices on the date column of your worksheet.
1. The consignment in account was credited for P12,000 and the consignment out was
credited for the same amount . This represents revenue earned from consignment. From
whose viewpoint is the second statement correct?
a)
From both consignee and consignor c) From consignor only
b)
From consignee only.
d) some deductions from both should be made first
2. If all consigned goods were sold, a debit balance in the consignment out account
represents
a) consignment loss
c) inventoriable cost
b) deferred costs
d) advances received
3. If consignor allowed consignee to sell on account, in consignor’s book this is recorded as
a) due from consignee
c) inventoriable cost
b) deferred cost
d) due to consignor
4. Consignor paid freight on goods consigned. If goods are unsold, freight should be part of
a) expenses
c) inventoriable cost
e) both b) and c)
b) balance of consignment out d) balance of consignment in f) b), c and d) are correct
5. Principle of matching is applied to which of the following costs?
a) Installation
c) commission
e) none of the aforementioned costs
b) delivery
d) all
6. Goods on consignment including freight and insurance are inventoriable cost of
a) consignor until it is sold c) both consignee and consignor
b) consignee until it is sold d) neither consignee nor consignor
7. Consignor recognizes revenue when consigned goods are
a) shipped to consignee
c) sold by consignor to consignee
b) received by consignee
d) included in the account sales
8. The title Merchandise Shipment on Consignment is closed in consignor’s book at the end
of the accounting period to determine
a) total cost of goods sold
c) total cost of goods shipped
b) regular cost of goods sold
d) total cost of goods returned
9. If consignee did not make a full remittance, which account will have a debit balance?
a) Consignment In
c) Due From Consignee
b) Consignment Out
d) Both a) and c)
10. Consigned goods while in the hands of the consignee should be
a) deducted from consignor’s available for sale
c) added to consignor’s inventory
b) added to consignee’s inventory
d) recorded as Due from Consigne
PROBLEMS (Problems A and D on the left side of the worksheet. Problems B and C on
the right side.
A. (RPCPA EXAM) Aircon Inc. consigned 12 one-horse power air-condition units to Argy
Trading and paid P2,000 freight out. Gross margin is 25% of selling price which was set
for P12,000. The consignee is allowed a commission of 5% on sales but is required to give
an advance payment to be deducted proportionately based on sales made. Argy Trading’
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account sales on December 2015, gave a remittance for 6 units sold after deducting selling
expenses of P800, delivery and installation of P1,200 and the appropriate commission and
advances.
Required: 1. Prepare an account sales.
2. Entries in the books of the consignor. Consignment profit is determined
separately.
3. Reclassifying entry(s) of consignor, if any.
B. Henry Inc. sells piano for Key Inc. on consignment basis. His ledger postings show among
others the following account:
Consignment In - Key Inc.
Freight and Insurance
Sales (3)
(10 pianos)
P3, 500 Returns (3)
Delivery
300
Commission
6,300
Freight for 3 pianos returned
1,050
P21,000
Just before the year ended in 2015, Henry made only an 80% remittance of the total
amount due. Sales price is 100% above cost. Key paid P2,750 shipping cost for the
shipment.
Required:
1) Entries in the book of the consignee to record only a) remittance and b)
reclassification for reporting purposes.
2) All entries in the books of the consignor. Support with a table analyzing for cost of
total shipment, goods sold, goods returned, goods sold.
3) Give the proper presentation of the balances in the balance sheet of
a) consignee and b) consignor.
C. REFER TO PROBLEM B. Two more units were sold on January2016. Related expenses
needed were incurred by Henry and full remittance was made.
Question 1: How much will be remitted?
Question 2: How much is Key’s consignment profit or loss?
Question 3: How much is inventoriable cost of Key?
D. Moran Appliances consigned on November 5 five electric fans costing P800 each to Dizon
Marketing Company, which was to sell them at any price above P1,000. The amount over
P1,000 will represent consignee's commission. Moran paid the trucking cost of P200 and
is to reimburse Dizon for local delivery to customers. During December, Dizon Marketing
sold three fans, two for cash at P1,500 each and one on credit at P1,800 of which it had
collected 50%. Dizon paid P170 for local delivery to customers. Full remittance is
required within a month from the time goods are sold.
Question 1: Assuming that Dizon Marketing made interim settlement as of December 15,
how much should it remit to Moran Appliances?
Question 2: How much is the profit to date of Moran Appliances resulting from the
consignment?
Question 3: How much is the profit to date of Dizon?
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QUIZ-CONSIGNMENT
PROF ZENAIDA VERACRUZ- MANUEL
SOLUTION
1.C
2. A
3A
4A
5E
6D
7.D
8.B
9C
11. C
Prob A
PROBLEMS
1. Sales (6 x 12,000)
Less: Selling
Installation
Commission
Balance
Less: Advances
Due for remittance
Units on Hand
2,
72,000
800
1,200
3,600
Entries (Consignor)
a.
Consignment Out – Argy
Merchandise Shipment on consignment
108,000
108,000
Consignment Out – T. Nippon
Cash
2,000
2,000
Cash
Advances from Consignee
3.
5,600
66,400
6,000
60,400
6
12,000
12,000
Cash
Advances
Consignment Out
Consignment Out – T. Nippon
60,400
6,000
5,600
Consignment Out
Consignment Profit
11,400
72,000
11,400
Reclassifying entry:
Merchanise Inventory-Consignment
Deferred Consignment Expenses
Consignment Out (unsold including freight)
This should close the consignment out account.
Sales
Cost of Sales (72,000 x 75%)
Commission
Selling Expenses
Delivery & Installation
Freight (2,000 x 6/12)
Net Profit
Prob B
1. Balance of the consignment in represents amount for remittance
Remittance 80% of P9850= P7,880
Due to consignor 20%= P1,970
1) Consignment In -Key Inc.
54,000
1,000
55,000
P72,000
P54,000
3,600
800
1,200
1,000
60,600
P 11,400
P9,850
7,880
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Cash
7,880
2) Consignment In
Due to Consignor
1,970
1,970
b) Entries in the Books of Consignor
Consignment Out – Henry Inc.
Merchandise Shipment on Consignment
(21,000/3 = 7,000 /200% = 3,500 x 10)
35,000
35,000
Consignment Out – Henry Inc.
Cash
2,750
2,750
Cash
Consignment Out – Henry Inc.
Due from Consignee
Consignment Out – Henry Inc.
7,880
11,150
1,970
Merchandise Shipment on Consignment
Consignment Out
10,500
21,000
10,500
Consignment Loss
Consignment Out
900
900
Table
Cost
Shipping Cost
Freight
Delivery
Commission
Freight
Total
35,000
2,750
3,500
300
6,300
1,050
48,900
Sales
Less charges for goods sold
Expenses for goods returned
Consignment Loss
4 Unsold
14,000
1,100
1,400
3 Returns
10,500
825
1,050
16,500
1,050
13,425
3 Sold
10,500
825
1,050
300
6,300
18,975
P21,000
P18,975
2,925
21,900
P 900
Reclassifying entry:
Reclassifying entry:
Merchanise Inventory-Consignment
Deferred Consignment Expenses
Consignment Out (unsold including freight)
14,000
2,500
16,500
3) Consignee’s Balance Sheet Current Liability-Due to Consignor
P 1,970
Consignor’s Balance Sheet Current Assets: Due from Consignee
Merchandise Inventory-Consignment
Deferred Consignment Expenses
C. 1) Sales (2x 7,000)
Less: Delivery Expenses to be reimbursed
Commission
Balance to be remitted from addtl sales
14,000
(200)
(4,200)
9,600
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P 1,970
14,000
2,500
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Due to Consignor previous swales
Total
2) Sales
Less:
1,970
P11,570
14,000
COS (2 x 3,500)
Shipping Cost
Commission
Freight
Delivery Expense
Profit of Moran Appliance
3) Inventory- Consignment
Deferred Consignment Expenses
Consignment Out debit balance
7,000
550
4,200
700
200
12,650
P 1,350
P7,000
1,250
P8,250
D.
a)
For remittance (3 x 1,000)
Less: Delivery Expenses
Balance to be remitted
b) Sales
Less:
c)
3,000
170
2,830
3,000
COS (3 x 800)
Trucking Cost (3/5 x 200)
Delivery Expense
Profit of Moran Appliance
2,400
120
170
Sales (1,500 x 2 = 3,000 + 1,800)
Less: Contract Price (3 x 1,000)
Profit of Dizon representing commission
4,800
3,000
1,800
2,690
P 310
Exercise 4
4.
a.
*
b.
Sales (80 x 25,000)
Less: Commission
Advertising
Del. & Inst.
Cartage
Freight
Balance
Less check endorsed
Balance still due
Returns
* 2,050,000
307,500
3,500
750
1,500
1,250
Balance still due
Remittance
Total
Less charges except commission
Net after 15% commission
Divide by
Total Sales
93,000
1,642,500
1,735,500
7,000
1,742,500
85%
P2,050,000
314,500
1,735,500
1,642,500
P 93,000
5 sets
/25,000 = 82, units sold
Consignment in – White Power House
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Commission
Advertising
Del. & Inst.
Cartage
Freight
Remittance
Merchandise shipped
Freight
Commission
Advertising
Del. & Inst.
Cartage
Freight
Profit
c)
307,500
3,500
750
1,500
1,250
1,642,500
Consignment Sales
Consignment Out – Eternal Power Block
1,800,000 2,050,000
Consignment Sales
1,500
60,000
Ret. Merchandise
300,000
3,500
750
500
250
748,940
Analysis of Cost and Expenses
(150)
Total
Charges of Consignor
Cost of Merchandise
Freight
Charges of Consignee
Freight On Return
Del. & Inst.
Cartage
Commission
Advertising
Total
(5)
Sets Ret.
1,800,000
5,500
60,000.00
183.33
1,250
750
1,500
307,500
3,500
2,120,000
1,250.00
(63)
Sets Unsold
(82)
Sets Sold
756,000
2,310
50.00
630.00
________
61,483.33
_________
758,940.00
d) Sales
Less:
984,000
3,006.67
750.00
820.00
307,500
3,500.00
1,299,576.67
2,050,000.00
Charges rel.ated to sets sold
Expenses related to return
Consignment Profit
c)
2,050,000
1,299,576.67
1,483.33
1,301,060.00
748,940.00
Entries on books of consignee
Received 150 generators from White Power House to be sold at P25,000 each for 15%
commission, expenses reimbursable.
Consignment In –White Power House
Cash
Consignment Receivable
Cash
Consignment In –White Power House
Cash
Consignment Receivable
Returned 5 Generators to White Power House
Consignment In – White Power House
Cash
Consignment In – White Power House
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5,750
5,750
1,025,000
1,025,000
2,050,000
932,000
932,000
1,250
1,250
1,642,500
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Cash
1,642,500
Books of Consignor
Consignment Out – Eternal Power Block
Merchandise shipment on consignment
Consignment Out – Eternal Power Block
Cash
Cash
Due from Consignee
Consignment Out – Eternal
Consignment Out – Eternal
Merchandise Shipment on Consignment
Consignment Out – Eternal
Consignment Out
Consignment Profit or Loss
1,800,000
1,800,000
5,500
5,500
1,642,500
93,000
314,500
2,050,000
60,000
60,000
748,940
748,940
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