CONSIGNMENT  T H E O R Y

Terms to remember.............

Consignor

Is the manufacturer or wholesaler who sends goods to his agents to be sold on commission basis.

Consignee

Is the agent who sells goods on behalf of the consignor on commission basis.

Types of commission.........

Ordinary commission

- It is the general commission allowed to the consignee at fixed rate percentage.

- It is calculated on Total Sales

Del Cerede  Agent / Commission

  • This is a special commission allowed to the consignee when goods are sold on credit.

  • It is calculated on Total Sale if nothing is mentioned or on credit sale if mentioned in the sum.

Note- If Del Cerede Commission is allowed to the consignee any bad debt which arises due to credit sale will be beared by the consignee.

               If Del Credere commission is not allowed then any loss which arises due to bad debt will be beared by the consignor.

Special Commission / Overriding commission

- It is a special commission allowed to the consignee over and above selling price or invoice price.

 

Example-  If SP = 100;   Sold = 130;  Pieces = 500;   Commision = 25%

                                                           then commission  =  15000 x 25 / 100

 [where 500 x 30 = 15000]                                              = 3750 (answer)

 

 

ACCOUNTS TO BE PREPARED______________________________

 

 

In the books of Consignor

 

  1. Consignment A/c

  2. Consignee A/c

  3. Goods sent on consignment A/c

  4. Consignment stock A/c

  5. Abnormal Loss A/c

  6. Consignment Debtor A/c  ( If Del Credere Commission is not allowed )

  7. Commission A/c

 

 

In the books of consignee

 

  1. Consignor A/c

  2. Consignment A/c ( If Del Credere Commission is allowed )

  3. Del Credere Commission A/c

 

 

NOTE:-

                -Discount on bill can or cannot be taken in consignment A/c. If nothing is  mentioned then take it.

              - If discount on bill is to be treated as financial expense then not to be shown in consignment A/c.

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