Question

Othen exp. recuoring
type exp
ccounting for consignments
111-63
9.
williams of chennai consigned 300 chests of tea at * 2,000 per chest to johnson of new
delhi paying freight 4,000 and other expenses > 2,000. johnson sold 250 chests at
2,500 per chest on credit and 25 chests at * 2,200 per chest for cash. johnson spent for
freight and octroi 3,000 and other expenses 1,000. he remitted the amount due to
williams after deducting his commission at 5% (normal), 2.5% (overriding), and 0.5% del
credere (del credere commission to be given on total sales). johnson found that one
customer to whom credit of 40 days was allowed paid only * 4,800 out of the total amount
of 5,000 due from him in full settlement of account. other customers paid the amount on
due dates.
pass journal entries in the books of both the parties. (ignoring gst)
[profit 66,350; consignment stock 50,750; balance received * 6,21,600].​

Answer 1

Answer:

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Answer 2

Following are the journal entries for this question.

Explanation:

In the books of consignor ( Williams )

1) consignment a/c  dr.  6,00,000

               to goods sent on consignment a/c   6,00,000

( being goods sent on consignment )

2) consignment a/c   dr.  6,000

                                    to cash a/c  6,000

( being expenses paid by consignor 4,000 + 2,000 )

3) Johnson   dr.   4,000

                                 to consignment a/c  4,000

( being expenses paid by consignee 3,000 + 1,000 )

4) consignment a/c   dr.   54,400

                                  to Johnson   54,400

[ being commission paid to consignee, normal commission = @ 5 % on total sales = 680,000 * 5/100 = ₹34,000,    overriding commission = @ 2.5 % on total sales = 6,80,000 * 2.5/100 = 17,000,    del - credere commission = @ 0.5 % on total sales = 6,80,000 * 0.5/100 = 3,400,   so total commission = 34,000 + 17,000 + 3,400 = 54,400 ]

5) cash/bank a/c  dr.  6,25,600

                             to Johnson   6,25,600

[ being due amount received from consignee , total sales - total commission = 6,80,000 - 54,400 = 6,25,600 ]

6) profit & loss a/c  dr.   66,350

                               to consignment a/c   66,350

(being profit earned on consignment )

In the books of consignee ( Johnson )

1) William  dr.   4,000

                 to cash a/c   4,000

( beings expenses paid on goods received on consignment )

2) cash a/c  dr.   55,000

   debtors a/c  dr.   6,25,000

                               to William   6,80,000

( being goods sold )

3) William  dr.   54,400

                  to commission a/c   54,400

( being commission earned )

4) William  dr.   6,25,600

                  to cash/bank a/c  6,25,600

( being balance due payment made to consignor )