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Principles and Practice of Accounting > Consignments > Accounting Entries in books of Consignee
Consignments

Accounting Entries in books of Consignee

Goods on consignment are sent by the consignor or the principle to the consignee or agent. The consignor is the owner of the goods and not the consignee though the possession is transferred. However, after the goods are sold the buyer becomes the owner of the goods. Here, we will discuss the accounting entries in the books of the consignee.

Accounting Entries in books of Consignee

There are no entries passed in the books of the consignee for the consignment of goods sent by the consignee and also for any expenses incurred by the consignor. However, the advance paid to the consignor, sales made, expenses incurred on the consignment and commission earned needs to be recorded.

A consignee is often allowed del-credere commission in addition to the usual ordinary commission. In the case where he is allowed del-credere commission, bad debts are borne by him and not the consignor.

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Journal Entries in the books of Consignee

Date Particulars   Amount  Amount 
1. On the sale of goods Cash /Bank/ Debtor’s A/c Dr.  xx
To Consignor’s A/c  xx
(Being goods received on consignment sold)
2. For advance to the Consignor Consignor’s A/c Dr.  xx
To Bank/ Bills Payable A/c  xx
(Being advance paid to the consignor)
3. For expenses incurred and commission earned Consignor’s A/c Dr.  xx
To Bank A/c  xx
(Being consignor’s account debited for expenses incurred in relation to the consignment and commission earned)
4. For Bad debts Bad Debts A/c Dr.  xx
To Customer’s A/c  xx
(Being bad debts recorded)
5. For writing off bad debts
a. The del-credere commission is not allowed Consignor’s A/c Dr.  xx
To Bad Debts A/c  xx
(Being bad debts written off as borne by the consignor)
b. The del-credere commission is allowed Commission A/c Dr.  xx
To Bad Debts A/c  xx
(Being bad debts written off from the commission)

Solved Example For You

Q. On 1 October 2017 Zeal Ltd. sent goods costing ₹60000 to Kent Ltd. Packing charges were ₹2000. On 4 October 2017 Kent Ltd. received the goods and sent an advance of ₹ 40000 to Zeal Ltd. Kent Ltd. spent ₹3000 on cartage, ₹500 on insurance and ₹1000 on godown rent.

On 31st March 2018, Kent Ltd. sent his Account Sales showing that 80% of the goods had been sold for ₹60000. It also remitted the balance amount to Zeal Ltd. It is entitled to a commission of 12% including the del-credere commission. One of the customers became insolvent and was unable to pay a sum of ₹1000. Pass the accounting entries in the books of the Consignee.

Ans:  Journal Entries in the books of Kent Ltd.

Date Particulars   Amount (Dr.) Amount (Cr.)
4 Oct Zeal Ltd’s A/c Dr. 40000
To Bank A/c 40000
(Being advance paid to Zeal Ltd.)
4 Oct Zeal Ltd’s A/c Dr. 4500
To Bank A/c 4500
(Being Zeal Ltd’s account debited for expenses on cartage, insurance and godown rent incurred in relation to the consignment)
31 Mar Zeal Ltd. A/c Dr. 20000
To Bank A/c 20000
(Being balance amount remitted to Zeal Ltd.)
31 Mar Debtor’s A/c Dr. 60000
To Zeal Ltd. A/c 60000
(Being sales effected)
31 Mar Zeal Ltd. A/c Dr. 7200
To Commission A/c 7200
(Being commission including del-credere commission received)
31 Mar Bad Debts A/c Dr. 1000
To Debtor’s A/c 1000
(Being bad debts recorded)
31 Mar Commission A/c Dr. 1000
To Bad Debts A/c 1000
(Being bad debts written off from the commission)

 

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