Consignment

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Consignments

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Consignment

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INDEX What is a Consignment? Distinction between Sale and Consignment Procedure & related terms Preparing Consignment Account Valuation of Consignment Inventories Accounting entries in the books of the Consignee Normal and Abnormal Loss Treatment of goods invoiced above cost Security against the Consignment Conclusion Š MeraSkill


Concept

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What is Consignment ➢ Consignor sends goods to Consignee ➢ For Sale on behalf of Consignor ➢ No transfer of ownership or risk ➢ Relationship of a principal and agent ➢ Payment in the form of Commission ➢ Reimbursement of consignee’s expenses

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Sale 1.Transfer of ownership from seller to buyer 2.Creditor and Debtor 3.Goods sold cannot be returned 4.Buyer bears loss of goods after delivery 5.Expenses incurred by the buyer for safeguarding the goods are his own

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Consignment 1.No transfer of ownership 2.Principal and Agent 3.Goods sent continue to be property of consignor 4.Consignor bears the loss of goods even after delivery 5.Expenses of consignee for safeguarding the consignment are borne by consignor

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Consignment Procedure & Related Terms

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Consignment ➢ Proforma Invoice ➢ Consignor’s expenses ➢ Consignee expenses ➢ Advance by consignee ➢ Return of goods by consignee

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Consignment - Related Terms ➢ Ordinary Commission ➢ Del Credere Commission ➢ Overriding Commission ➢ Account Sales ➢ Unsold inventory

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