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Accounting in the books of the consignee

The consignee does not pass any entries when goods are consigned to him and when the consignor incurs the expense. He is concerned about the entries that are to be passed when he sells the goods, pays advance, incurs expenses and earns commission. The following entries are passed in the books of the consignee:


No entry is passed in the books of consignee for the following:



  • Receipt of goods from the consignor – only possession is transferred not the ownership
  • Expenses incurred by the consignor – to be borne and paid by consignor
  • Abnormal/normal loss in his godown or in transit – consignor’s loss
  • Bill receivable discounted by the consignor – Consignor’s transaction
  • Return of goods by the consignee – Only possession is transferred
  • Unsold stock lying with the consignee – belongs to consignor

Illustration 5


A of Chennai purchased 10,000 meters of cloth for ₹ 2,00,000 of which 5,000 meters were sent on consignment to B of Bengaluru at the selling price of ₹ 30 per meter. A paid ₹ 5,000 for freight and ₹ 500 for packing, etc. B sold 4,000 meters at ₹ 40 per meter and incurred ₹ 2,000 for selling expenses. B is entitled to a commission of 5% on total sale proceeds plus a further 20 per cent on any surplus price realized over ₹ 30 per meter,.₹ 3,000 meters were sold at Chennai at the rate of ₹ 30 per meter less ₹ 3,000 for expenses and commission. Owing to fall in market price, the stock of cloth in hand is to be reduced by 10 per cent. Prepare the Consignment Account and Trading and Profit and Loss Account in the books of A and his account in the books of B.



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