Homework - Consignment Arrangement (due on May 16, 2023)
Instructions: Use columnar paper with 2 columns for your answers. Journal entries must be in good form.
A.
On October 1,2022, Super Trouper Co. shipped 50 cordless phone sets to Contreras on consignment, the
sets to be sold at an advertised price of P2,000. The cost of each set to the consignor was P1,000. The cost
of shipment paid by the consignor was P750. The consignor agreed to absorb consignee’s expenditures
for cartage and also to allow the consignee P100 for delivery and installation of each set. Commission is
to be 25% of sales price. On October 31, Contreras submitted the following summary of consignment sales:
CONSIGNOR
(1)
(2)
(3)
(4)
(5)
(6)
50 cordless phone sets, costs P1,000 each set = P50,000
Freight P750
Consignor agreed to absorb consignee’s expenditures for cartage P1,000
Also to allow the consignee P100 for delivery and installation of each set P1,600
No entry on sale of goods
Commission Expense 25% of P32,000 (16 sets sold x P2,000) = 8,000
Cash = Remittance Enclosed P5,000
Consignee Payable = 2,600 (no. 3+no.4)
Consignment Sales revenue = P32,000
CONSIGNEE
(1)
(2)
(3)
(4)
(5)
(6)
Memorandum Entry
No entry
Consignor Receivable, Cash
Same as no. 3
Sale of goods for the consignor Dr Cash, Consignor Payable
Consignor Payable
Commission Revenue
Consignor Receivable
Cash
Sets received
Sets sold
Sets returned to consignor (defective)
Date
Oct. 1-31
Particulars
Sales: 16 sets @P2,000
Charges:
Cartage in
Commission
Delivery & installation cost
Balance
50
16
4
Amount
15,000
P
1,000
8,000
1,600
10,600
P 21,400
Remittance enclosed
Balance owed (collections from customers not
5,000
P 16,400
yet made)
REQUIRED:
1. Give the journal entries in the books of the consignor assuming profit is determined separately.
2. Give the journal entries in the books of the consignee assuming profit is determined separately.
3. Compute for the following:
a. Consignment profit for October.
b. Inventory on consignment as of October 31.
B. Triumph Co. consigned 8 heavy equipment to Champion Co. Each equipment cost P1,000,000 and
has a suggested retail price of P2,100,000. Triumph paid P200,000 in transporting the equipment
to the consignee’s place of business. At the end of the period, Champion reported 3 unsold
equipment and remitted the collections on sales during the period, after deducting the following:
 Commission (based on sales net of commission)------------20%
 Finder’s fee (based on commission)------------------------------5%
 Delivery, installation and testing (on each unit sold)-----P50,000
Materials generated from the testing were sold for P5,000 and included in the remittance to
Triumph Co.
REQUIRED: Compute for the following:
1. Consignment profit
2. Net remittance to the consignor
3. Cost of unsold equipment