Consignement accounting

Consignment Accounting Journal Entries:
Learning Objectives:
1. Make journal entries in the books of consignor and that of consignee.
As the goods sent on consignment by the consigner are not his sales, he must not record consignment as sales and the consignee must must not record them as purchases. Theconsigner should not take up any profit on the transaction until the goods have been actually sold by the consignee. Since the goods still belong to the consignor, any unsold goods in the hands of the consignee at the end of the trading period should be included in the consignor's stock. The recording of the consignment transactions in the books of the consignor and consignee will be made in the following manner:
Accounting Entries in the Books of Consignor:
(1)
On dispatch of goods:-

Consignment account
(With the cost of goods) To Goods sent on consignment account

(2)
On payment of expenses on dispatch:-

Consignment account
(With the amount spent as expenses) To Bank account

(3)
On receiving advance:

Cash or bills receivable account
(With the amount cash or bill) To Consignee's personal account

(4)
On the consignee reporting sale (as per A/S):-

Consignee's personal account
(With gross proceeds of sales)

To Consignment account

(5)
For expenses incurred by the consignee (as per A/S):-

Consignment account
(With the amount of expenses) To Consignee's personal account

(6)
For commission payable to the consignee:-

Consignment account
(With the amount of expenses) To Consignee's personal account

Assuming that all the goods sent have been sold, the consignment account will show at this stage the actual profit or loss made on it. The same is transferred to profit and loss account.
The entry in case of profit is:

Consignment account

To profit and loss account

In case of loss the