Chapter 10

Problem I

1. The journal entries shown below would be made on the consignors and consignees
books (assume the use of perpetual inventory):

Entries on Consignors Books Entries on Consignees Books

Transactions (Herbalife Supplier) (Conrado Enterprises)
Inventory on
Shipment of goods Consigment 60,00 No entry
on consignment. Finished 0 (memorandum
Goods 60,00 entry only)
Inventory*.... 0

2. Payment of
expenses by Inventory on No entry
consignor. Consignment.. 600
Cash.. 600

3. Payment of Consignor
expenses Inventory on Receivable
by consignee. Consignment 2,400 2,400
Consignee Cash. 2,400
Payable 2,400
Advances by Cash 3,360 Advances to
Consignor Advances from Consignor 3,360
Consignee.. 3,360 Cash 3,360
Cash 48,00
Sale of merchandise No entry. Consignor 0 48,00
payable 0
Consignor
Payable..
Commission
6. Notification of sale Commission
to consignor and expense
payment of cash Advances from 4,800 Revenue.. 48,00
due. Consignee Consignor 0
Commission: Cash. 3,360 Receivable 4,800
10% x P48,000 = Consignee 37,44 ..
P4,800 Payable 0 Cash 2,400
Consignment 2,400 Advances 37,44
Sales 48,00 from 0
Revenue.. 0
Consignee 3,360

7. To record cost of
goods sold and Cost of goods 31,50
related costs. sold** 0
** (P60,000 + P600 Inventory on 31,50
+ Consignment 0
P2,400) x =
P31,500

*if periodic method is used, the credit should be consignment shipments account treated
as reduction in the Costs of goods available for sale to arrive at Cost of Goods Sold Available
for Regular Sale.

2. The remittance amounting to P37,440 can be determined by preparing the Account Sales
as follows:
 Sold for the Account of:
Jingka Juice
Sales (60 sachets of herbal goods) P48,000
Charges:
Finishing costs.. P 2,400
Commission (P48,000 x 10%).. 4,800 7200
Due to Consignor. P40,800
Less: Advances. 3,360
Balance P37,440
Remittance Enclosed 37,440
Balance Due P 0
Items on Hand (50 sachets of herbal goods): P60,000 x
50% P30,000

Problem II
1. The account sales:
Sold for the Account of:
AA Company
Sales (8 sets @ P24,000) P
192,000
Charges:
Freight-in P 6,000
Advertising expense 2,400
Deliveries and installation expenses 9,600
Repairs expense on units sold.. 4,800
70,80
Commissions, 25% of sales 48,000 0
Due to Consignor. P121,200
Less: Advances.
0
Balance P121,200
Remittance Enclosed 30,000
Balance Due P 91,200
Items on Hand 15 sets
Items Returned (defective).. 2 sets

2. The inventory on consignment amounted to P189,000 computed as:

Charge Analysis
Sales Inventor Total
(8 sets) y (25 sets)
(15 sets)
Charges by consignor:
Cost of consigned goods
(@P12,000/set) P 96,000 P180,000 P 300,000
Freight-out (P9,000/25 sets = P360 per 3,600* 5,400 9,000
set)
Charges by consignee:
Freight-in (P6,000/25 sets =P240 per 2,400* 3,600 6,000
set)
Advertising expense.. 2,400 0 2,400
Delivery and installation 9,600 0 9,600
Repairs expense 4,800 0 4,800
Commissions [25% of sales (8 sets x
 P24,000 per set] 48,000 ___48,000
0
Total P166,800 P189,000 P379,800
* Freight on sets returned is charged against sales of the period.
** Normally, the term freight-out is synonymous to delivery expense which is
classified as selling expenses if we are dealing with a third party. But, for consignment
accounting where the transfer of merchandise if from consignor to consignee, the
usage of the term freight-out does not construed to be a selling expense but still an
inventoriable cost (which is part of freight-in).

The consignment net income amounted to P25,200 computed as:

Consignment Sales (8 sets x P24,000 per set) P 192,000
Less: Costs and expenses:
Charges by Consignor:
Cost of consigned goods @P12,000/set) P 96,000
Freight-out (P9,000/25 sets = P360 per set) 3,600* 99,600
Charges by consignee:
Freight-in (P6,000/25 sets =P240 per set) P 2,400*
Advertising expense.. 2,400
Delivery and installation 9,600
Repairs expense 4,800
Commissions [25% of sales (8 sets x P24,000 per set] 48,000 67,200
Net Income P 25,200

Problem III

Summit Electronics Company

Inventory on Consignment (800 @ P570) 456,000
Finished Goods Inventory 456,000

Consignment Expense (P368,000 x 30%) 110,400

Accounts Receivable--Consignee Sales 257,600
Sales RevenueConsignment (P920 x 400) 368,000

Cost of Consigned Goods Sold (P570 x 400) 228,000

Inventory on Consignment 228,000

Cash [(P920 x 70%) x 380] 244,720

Accounts Receivable--Consignee Sales 244,720

Farley Hardware
No entry upon receipt of consigned merchandise.

Cash (P920 x 400) 368,000

Consignor Payable 257,600
Commission Revenue 110,400

Consignor Payable 244,720

Cash 244,720
Multiple Choice Problem

1. c P1,200

Commission = 25% x Sales price

P400 = 25% x Sales price
Sales price = P400 25% = P1,600

Number of units sold = Selling price = __P1,600__ = 8 tapes

Price per tape P200 per tape

Sales .. P1,600
Less Commission of consignee... 400
Amount remitted by Beta View Store...P1,200

2. a P 370

Charges Related to
Total Consignment Inventory on
Charges Sales Consignment
(25) (8) (15)
Consignors charges:
Cost P2,500 P800 P1,500
Freight-out 75 30 45
Consignees charge - Commission __400__ __400__ _______
Total P2,975 1,230 _P1,545_
Sales price _1,600_
Consignment profit _P370_

3. a P1,545 (refer to No. 2 for computation)

4. b
Sales (P2,250 / 15%) P15,000
Divided by: Selling price per unit P 1,000
Number of units sold 15 units

5. c
Sales P15,000
Less Charges:
Commission P 2,250
Advertising 1,500
Delivery expense ___750 __4,500
Due to Consignor P10,500
Less: Advances
Value of note sight draft: (100 beds x P600 per bed) x P36,000
60%
Multiplied by: Proportional number of beds sold 15/100 __5,400
Amount remitted P 5,100
6. d P1,500
Sales P15,000
Less Charges:
Consignors charge:
Cost of beds (P600 per bed x 15 beds) 9,000
Consignees charges:
Commission P2,250
Advertising 1,500
Delivery expense ___750 __4,500
Consignment net income P1,500

7. a no items were sold in November;

Sales (unknown) P x
Less Charges:
Commission 15% x
Remittance P 27,200

x 15%x = P27,200
85%x = P27,200
x = P32,000

8. c P16,800
Sales (unknown) x
Less Charges:
Advertising P500
Delivery and installation 100
charges
Commission (unknown) 20%x _______
Remittance P 12,840

x (P500 + P100 + 20%x) = P 12,840

x 20%x = P12,840 + P600
80%x = P13,440
x = P16,800

9. b- P6,080
Cost (P150 per unit x 40 units) P6,000
Freight on shipment (P200 x 40/100) 80
Cost of inventory on consignment P6,080

10. c - 6
Sales (unknown) x
Less Charges:
Commission (unknown) 20%x
Advertising P1,000
Delivery and installation 600
Cartage on consigned goods 500
Remittance P21,900

x (20%x + P1,000 + P600 + P500) = P21,900

x 20%x = P21,900 + P2,100
80%x = P24,000
x = P30,000
 Number of units sold = _P30,000_ =6
P5,000 per set

11. b P2,300
Charges Related to
Total Consignment Inventory on
Charges Sales Consignment
(10) (6) (3)
Consignors charges:
Cost P30,000 P18,000 P9,000
Freight-out 2,500 1,750 750
Consignees charges:
Commission (20% x P30,000) 6,000 6,000
Advertising 1,000 1,000
Delivery and installation 600 600
Cartage __500__ __350__ __150__
Total P40,600 27,700 _P9,900_
Sales price _30,000_
Profit on Consignment __P2,300__

12. d None of the above (P9,900) refer to No. 11 for computation.

13. No answer available - P17,625

Sales (Sales x 20%) P600 P390 P210 = P12,900
.8 Sales = P14,100
Sales = P17,625.

14. a (P270 x 50) + [(P600 80) x 50] = P13,875.

AA Sales - Nos. 15 to 17:

15. a
Gross collection (P15,000 x 70% x 80%) P
8,400
Less: Cash discount taken by customer (P8,400 x 2%) __168
Net collection P 8,232
Less Charges:
Expenses P 800
Commission (P8,400 x 15%) _1,260 __2,060
Due to Consignor P 6,172
Less: Advances _6,000
Amount remitted P 172

16. b
Charges Related to
Total Consignment Inventory on
 Charges Sales Consignment
(100%) (70%) (30%)
Consignors charges:
Cost P10,000 P 7,000 P 3,000
Freight 120 84 36
Consignees charges:
Expenses 800 800
Commission (15% x P10,500) 1,575 1,575
Cash discount (P10,500 x 80% x 168 168
2%)
Total P12,663 P 9,627 _P3,036_
Sales price (70% x P15,000) _10,500_
Profit on Consignment P 873

17. b refer to No. 16 for computation

RR Products Company Nos. 19 to 21

19. c
Collection made pertaining to:
May sale
Down payment (3 x P50) P 150
Monthly payment thereafter (3 x P10) 30 P 180
June sale
Down payment (1 x P50) ___50
Total P 230
Less: Commission (P230 x 20%) ___46
Amount remitted P 184

20. d P140
Charges Related to
Total Consignment Inventory on
Charges Sales Consignment
(5) (4) (1
Consignors charges:
Cost P 775 P 620 P 155
Freight 50 40 10
Consignees charges:
Commission 200 200 ____
Total P1,025 P 860 P165
Sales price (4 units x P250/unit) _ 1,000
Profit on Consignment P 140

21. b refer to No. 20 for computation

22. b
Collection made:
Cash sale (P1,500 x 2) P 3,000
Credit sale (P1,800 x 25%) ___450
Total P3,450
Less: Charges
Freight P 320
 Commission [(P3,000 + P1,800) x 15%] __720 __1,040
Amount remitted P 2,410

23. a
Charges Related to
Total Consignment Inventory on
Charges Sales Consignment
(5) (3) (2)
Consignors charges:
Cost P4,000 P 2,400 P 1,600
Freight 200 120 80
Consignees charges:
Freight 320 192 128
Commission 720 720 ______
Total P5,240 P 3,432 P1,808
Sales price 4,800
Profit on Consignment P 1,368

24. b P1,808 refer to No. 23 for computation

25. d 244,600
Sales on credit (14,000 per unit x 12 units) + (13,000 x 10) P298,000
Less: Sales allowance granted P 2,000
Bad debts 7,000
Commission [2% x (P298,000 P2,000)] _44,400 __53,400
Amount still due from BB, Inc P
244,600

26. d P67,280
Charges Related to
Total Consignment Inventory on
Charges Sales Consignment
(30) (22) (8)
Consignors charges:
Cost P240,000 P176,000 P64,000
Freight-out 1,800 1,320 480
Consignees charges:
Sales allowance 2,000 2,000
Bad debts 7,000 7,000
Commission
[15% x (P298,000 P2,000)] 44,400 44,400
Total P295,200 P230,720 _P64,480_
Sales price [P14,000 per unit x 12
units) 298,000
+ (P13,000 per unit x 10 units)]
Consignment profit P 67,280

27. d refer to No. 26 for computation

28. b 395
Sales (unknown) x
Less Charges:
Commission (unknown)
__x__ (P10)
 P100
Delivery expense __P45__ ________
Remittance P35,505

x- [( _x__ ) P10 + P45 ] = P35,505

100

x _P10x_ = P35,550
P100
P100x P10x = P3,555,000
P90x = P3,555,000
x = P39,500

Number of ballpens sold = _P39,500_ = P395

P100 per unit

29. b
Consignmen
Regular Sales t Sales Total
Sales P120,000 P30,000 P150,000
Cost of sales 84,000 19,500* 103,500
Gross profit P 36,000 P10,500 P 46,500
Operating expenses:
Commission (P30,000 x 5%) P 1,500 P 1,500
Freight-in (P260 x 1,950 1,950
P19,500*/P26,000)
Others
Regular (P15,150 x 12,120
P19,500/P26,000)
Consignment
(P15,150 x P30,000/P150,000) _______ 3,030 3,030
Total P 12,120 P 4,725 _P16,845_
Net profit P 23,880 P 5,775 P29,655
*P26,000 P6,500 = P19,500

30. d P5,775 (refer to No. 29 for computation)

31. a (P18,000 + P900) = P18,900