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    Csa 11

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    Von Andrei Medina
    This document discusses key aspects of consignment arrangements: 1. It provides an example of a consignment transaction between CTC and Lovely Company involving the sale of handbags. 2. It discusses how inventory accounts should be adjusted for consigned goods, including reducing inventory by the cost of goods held by others. 3. It provides an example of how to account for consigned goods received by Alps from Teds, including the payable that should be reported on Alps' balance sheet.

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    Csa 11

    Uploaded by

    Von Andrei Medina
    290 views1 page
    This document discusses key aspects of consignment arrangements: 1. It provides an example of a consignment transaction between CTC and Lovely Company involving the sale of handbags. 2. It discusses how inventory accounts should be adjusted for consigned goods, including reducing inventory by the cost of goods held by others. 3. It provides an example of how to account for consigned goods received by Alps from Teds, including the payable that should be reported on Alps' balance sheet.

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    CSA 11

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    This document discusses key aspects of consignment arrangements: 1. It provides an example of a consignment transaction between CTC and Lovely Company involving the sale of handbags. 2. It discusses how inventory accounts should be adjusted for consigned goods, including reducing inventory by the cost of goods held by others. 3. It provides an example of how to account for consigned goods received by Alps from Teds, including the payable that should be reported on Alps' balance sheet.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    290 views1 page

    Csa 11

    Uploaded by

    Von Andrei Medina
    This document discusses key aspects of consignment arrangements: 1. It provides an example of a consignment transaction between CTC and Lovely Company involving the sale of handbags. 2. It discusses how inventory accounts should be adjusted for consigned goods, including reducing inventory by the cost of goods held by others. 3. It provides an example of how to account for consigned goods received by Alps from Teds, including the payable that should be reported on Alps' balance sheet.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    of 1

    ENABLING ASSESSMENT

    1. On August 31, 2021, CTC Company consigned to Lovely Company ten ladies handbags which cost
    CTC P300 each. CTC paid freight charge of P150 on the shipment.

    On September 30, 2021, Lovely Company submitted an account sales reporting that is sold for cash
    seven handbags for which it remitted P3,165 representing the net proceeds after deductions as follows:

    Commission 20% of the selling price


    Advertising placed upon receipt of shipment P120
    Delivery of units sold 75

    ● The total sales price of the seven handbags sold is


    4200

    ● The inventory of the unsold handbags at September 30, 2021 is valued at


    945

    ● The consignor realized a net income on the consignment amounting to


    960

    2. The following items were included in Elma’s inventory account at December 31,2021:

    Merchandise out on consignment at sales price (mark-up of 40% on sales price) P40000
    Goods purchased, in transit, shipped FOB shipping point 36000
    Goods held on consignment by Elma 27000

    ● Elma’s inventory account at December 31, 2021 be reduced by


    43000

    3. On December 31, 2021, Alps received 505 sweatshirts on consignment from Teds. Cost of each
    sweatshirt was P80 each and was priced to sell at P100. Alps is entitled to a 10% commission. On
    December 31, 5 sweatshirts remained on hand while 5 were returned for being defective.

    ● In its December 31,2021 balance sheet, Alps should report as payable for consigned goods in
    the amount of
    44550

    4. In a consignment arrangement, revenue is recognized at the point in time when the consignment
    arrangement is made
    False

    5. Consignment arrangement is a specialized marketing method whereby the consignee takes possession
    of merchandise but little remains with the consignor
    True

    6. A consignment arrangement is implied when an entity has discretion in establishing prices for the other
    party’s goods or service.
    False

    7. Goods on consignment should be included in the inventory of both the consignor and the consignee.
    False

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