Chapter # 8

ADVANCED FINANCIAL ACCOUNTING
B.COM 2
CHAPTER # 8
CONSIGNMENT ACCOUNT
Roohullah (M.Com)
0333-87 86 389
THE STANDARD GIRLS COLLEGE

Advanced Financial Accounting Page |1
Journal Entries
Consignor Book Consignee Book
1. When goods are send to consignee

Consignment……..Dr.
Goods sent on consignment……..Cr.
2. Expenses paid by consignor

Consignment……..Dr.
Cash……………….Cr.
3. Expenses paid by consignee

Consignment………Dr. Consignor……Dr.
Consignee……….Cr. Cash………..Cr.
4. Advance send by consignee

Cash/Bank/Bills Receivable….Dr. Consignor…… Dr.
Consignee………..Cr. Cash/Bank/Bills Payable… Cr.
5. Consignment sold by consignee

Consignee………..Dr. Cash/Accounts Receivable…Dr.
Consignment………….Cr. Consignor…….Cr.
6. Commission charged by consignee

Consignment A/c……. Dr. Consignor A/c…… Dr.
Consignee A/c….. Cr. Commission A/c….. Cr.
7. Goods taken by consignee for personal

use Purchases…Dr.
Consignee…….Dr. Consignor……….Cr.
Consignment……..Cr.
8. Amount send / remitted by consignee to

consignor Consignor………..Dr.
Cash/Bank/Bills Receivable…..Dr. Cash/Bank/Bills Payable…..Cr.
Consignee……….Cr.
9. Closing Stock (only when consignment

remain unsold with consignee)
Consignment stock….Dr.
Consignment…..Cr.
10. Profit on consignment

Consignment…..Dr.
Profit and loss…….Cr.
Roohullah (M.Com) 0333-87 86 389 Lecturer: The Standard College

11. Loss on consignment

Profit and loss….Dr.
Consignment…….Cr.
12. Closing the books of accounts

Goods sent on consignment….Dr.
Trading………Cr.
LEDGER ACCOUNT / NECESSARY LEDGERS / DIFFEENCT ACCOUNTS /

VARIOUS ACCOUNTS
IN THE BOOK OF CONSIGNOR

1. Consignment A/c
2. Consignee A/c
3. Goods sent on consignment A/c
IN THE BOOKS OF CONSINGEE

4. Consignor A/c
IN THE BOOKS OF CONSIGNOR
Consignment A/C
Reference Rs. Reference Rs.
Goods sent on consignment Consignee A/c (Sales) X
Cash A/C (consignor expenses) Consignment Stock X
Rent X
Insurance X
Freight X
Railway charges X
Transportation etc. X X
Consignee A/c
Loading charges X
Unloading charges X
Selling expenses X
Warehousing charges X
Bad debts X
Commission X X
Profit & Loss Account (profit) X
X X

Consignee A/c
Consignment A/C (Sales) X Consignment A/c
(Consignee Expenses)
Loading charges X
Unloading charges X
Selling expenses X
Warehousing charges X
Bad debts X
Commission X X
Cash / Bank / B/R (Advance) X
Cash A/c (remittances) X
Balance c/d X
X X
Goods sent on Consignment A/c

Trading A/c Consignment A/c
IN THE BOOKS OF CONSIGNEE
Consignor A/c
Cash A/c: Cash / A/R (Sales) X
(Consignee Expenses)
Loading charges X
Unloading charges X
Selling expenses X
Warehousing charges X X
A/R (Bad debts ) X
Commission A/c X
Cash / Bank / B/P (Advance) X
Cash A/c (Remittances) X
Balance c/d X
X X

Consignment Stock
Consignor
= X
Consignee
= X
Consignment Stock X
Direct Expenses
Wages, Carriage, Freight, Transportation, Custom duty, Octori duty, Railway charges, clearing
charges, Loading & Unloading etc.
ILLUSTRATION
1. Hammad & Co. of Lahore consigned to Ahmad of Gujrat, 60 watches at Rs. 200 per box. The
consignor paid carriage and insurance of Rs. 1,000. Farooq sent Rs. 5,000 as advance payment.
Hammad & Co. received an Account Sales from Ahmad containing the following particulars:
a) Gross sales proceeds are Rs. 17,000
b) Transportation and warehousing charges are Rs. 750
c) Commission at 15% on gross proceeds.
Hammad & Co. received bank remittance for the balance due from Ahmad on the consignment.
Pass the Journal entries and the necessary ledger Accounts in the books of consignor and
consignee.
2. Rahim & Co. of Sialkot sent on consignment to Salim & Sons. of Lahore 60 chairs costing Rs.
100 per case. Expenses incurred by the consignor at Sialkot are:
Freight Rs. 140; insurance Rs. 30; Loading charges Rs. 10
Rahim & Co. Draw on Salim & Sons. 2 months bill at sight for Rs. 3,500 which the latter
accepts. The charges paid by Salim & Sons. at Lahore were: unloading charges Rs. 15; storage
Rs. 40; insurance Rs. 10. Commission is payable to Salim & Sons at 2% on all sales in addition
to 1-1/2% delcredere commission.
The consignor sells for prompt cash 30 chairs @ Rs. 112 per chair; 25 chairs @ Rs. 125 per chair
and the balance @ Rs. 140 per chair. The account was settled immediately by means of a bank
draft.

Write up the transactions and ledger accounts in the books of both the parties.
3. On 1st July 2010 Q & Co. sends 300 Mobiles Zahir on consignment basis. The cost of each
mobile was Rs. 2,000. Q & Co. incurred the following expenses on the consignment: Rs. 1,500
on railway freight and Rs. 900 on insurance.
200 mobiles were sold by Zahir uniformly at Rs. 4,000 per mobile. Out of these 10 mobile were
sold to a party on credit and full amount ultimately proved bad. The expenses of Zahir amounted
to Rs. 2,400. He sent an account sale on 31st December 2010 which revealed that he charged 5%
as ordinary commission and 10% as delcreder commission. He sent a bank draft for Rs. 180,000.
You are required to prepare Consignment Account, Zahir Account and goods sent on
Consignment Account in the books of Q & Co.
4. Zeeshan & Co. of Karachi sent 100 cycles to Zubair & Bros. of Rawalpindi at Rs. 500 per
cycle. Expenses on the Consignment incurred by the consignor amounted to Rs. 1,500. Zubair &
Bros. in Rawalpindi were working as delcredere agents. Their commission is 5%; Delcredere
Commission is 7-1/2%.
Exactly after six months an Account Sales was received by Global Co. giving the following
information.
a) Sales proceeds of 75 cycles Rs. 60,000
b) Stock of unsold goods in hand 25 cycles
c) Commission charged at agreed rates of 5% + 7 ½%
d) Consignee’s expenses amounted to Rs. 6,00
e) A bank draft Rs. 50,000 was sent by Zahid bros. along with the account sales.
You are asked to give the necessary entries in the books of the consignor to record the above
transactions.
5. On 1st March 2010, Kamran consigned cloth to the value of Rs. 325,000 at cost to Akram &
Sons, his agent in Multan. Who accepted a 3 months draft for 80% of the normal selling price.
The draft was discounted at a cost of R. 6,500.
Kamran paid Rs. 17,500 as freight and Rs. 3,250 as insurance. On 30th September 2010, Akram
& Sons notified Kamran that 4/5th of the goods had been sold for Rs. 412,000 and that the selling
expenses were Rs. 6,050.
Kamran normal selling price was cost plus 50% and Akram & Sons’ were entitle to a
commission at the rate 10% on normal selling price plus 25% of any surplus price above normal.
Show these transactions in the ledger of both the parties.
6. Mr. X in Sialkot consigned to Mr. Y in Gujranwala, goods to the value of Rs. 150,000 (cost
Rs. 120,000), paying freight charges Rs. 10,000 and draws a bill on Mr. R for Rs. 60,000. 3/4th of
this consignment was sold by Mr. R for Rs. 140,000 and expenses Rs. 12,000 were incurred. Mr.

Y is also entitled to a commission of 6% on sales. Mr. Y remitted to Mr. X, the net amount held
for his account by means of a sight draft. Show the ledger accounts in the books of Mr. X.
7. On 1st January 2010 Mr. A of Lahore consigned to Mr. B of Sargodha goods for sale at invoice
price. Mr. B is entitled to a commission of 5% on invoice price and 10%of any surplus price
realized. goods costing Rs 48,000 were consigned to Sargodha at the invoice price of Rs 56,000,
the expenses of consignment amounted to Rs. 4,000.on 31st March 2010 an account sales was
received from Mr. B showing that he had affected sales of Rs 48,000 in respect of 3/4 of the
quantity of goods consigned to him. The expenses incurred by him amounted to Rs.1, 200; Mr. B
remitted the amount due by a bank draft,
Prepare consignment account goods sent on consignment account and Mr. B’s account in
the book of Mr. A and show the manner in which the books would be closed on 31 st March
2010
8. On 1st January, 2010 Bilal of Lahore consigned to Ahmad of Multan goods for sale at invoice
price. Ahmad is entitled to commission of 5% on invoice price and 20% of any surplus price
realized. Goods invoiced to Ahmad at Rs. 288,000 so as to give a profit of 20% on cost. The
expenses of the consignment amounted to Rs. 15,000. On 31st March, 2010, an Account Sales
was received from Ahmad showing that he had affected sales of Rs. 240,000 in respect of 2/3 of
the quantity of goods consigned to him. His actual out of pocked expenses amounted to Rs.
16,800. Babar accepts a bill drawn by Ahmad for Rs. 80,000 and remitted the balance due from
him in cash.
Give consignment Account and Ahmad’s account in the books of Bilal.
9. Rameez of Gujranwala sent 100 machines to Ali at R. 1,300 (Rs. 1,600 invoice price) per
machine. The consignor paid Rs. 4,000 for packing and dispatching charges. Ali, immediately
after receiving the consignment accepted a bill for Rs. 80,000. After some time Ali reported that
80 machines were sold for Rs. 1,750 each and expenses being on freight, Rs. 6,000 on godown
rent, Rs. 500 and on insurance Rs. 1,000. Ali is entitled to a commission of 9% on sales. Due to
insolvency of a customer who purchased 4 machines failed to pay anything. Another customer
reduced Rs. 500 due to the defects in the machines purchased.
Show consignment Account, Ali Account and goods sent on consignment Account.
10. On 1st Jan. 1990 Raiz & Co. of Lahore consigned to Mohsin & Co. of Mardan 100 cycles at
Rs. 1,000 each which was 20% above their cost price. Raiz & Co. had paid Rs. 400 for packing
etc., Rs. 100 for insurance and Rs. 500 for carriage. On 1st March 1990, Mohsin & Co. sold 75
cycles for Rs. 90,000 the expenses thereon being Rs. 4,000. Mohsin & Co. are entitled for
commission of 5% and 2% (delcrader) on sales and they remitted Rs. 60,000 on account. One
customer who purchases 5 cycles failed to pay his debts due to his insolvency. Pass the necessary
entries and prepare the necessary ledger accounts in books of Raiz & Co.
11. Zahid & Sons of Karachi dispatched a consignment of 400 cases of electric bulbs to Hamdan
of Kohat on 1st December 2010. The invoice price was quoted at Rs. 260,000 so as to give a
profit of 25% on cost. On 25th December Hammad sent account sales with the following details:

a) 75% of the goods were sold.

b) Hamdan paid unloading charges Rs. 2,400
c) Advertisement and selling expenses paid by Hamdan amounted to Rs. 1,400
d) Hamdan is to receive a commission of 5% on sales.
e) A bank draft was sent for the amount due.
At the time of dispatch Zahid & Sons incurred an expenditure of Rs. 4,000 towards freight and
insurance charges.
Prepare necessary ledger accounts in the books of the consignor.
12. On 1st Jan. 1994, Mubashir Coal Co. of Karachi consigned to Ramiz Ltd. of Lahore 10,000
tons of coal. The cost of coal was Rs. 20 per ton and railway charges were Rs. 5 per ton. On 25th
Feb. an Account sales was received from Ramiz Ltd. showing that 5000 tons of coal sold @ Rs.
40 per ton; sales expenses Rs. 2,000, Insurance Rs. 500, Brokerage 2% and commission 3% on
sales. The agent enclosed a bill for the sales proceeds less expenses and reported a shortage of
100 tons on the whole consignment. Show the consignment account in books of Mubashir Coal
Co.
13. On 1st Jan. 2010 Salman Chemicals of Lahore sent 100,000 liters of chemical to Farooq of
Faisalabad at a cost of Rs. 26 per liter. They paid carriage Rs. 16,000 and octroi duty Rs. 2,000.
Farooq received the consignment and unloading charges amounted to Rs. 2,000 were paid. On
28th Feb. 2010, Farooq sent account sales showing 80,000 liters of chemical sold @ Rs. 32 per
liter, selling expenses incurred Rs. 8,000, godown rent Rs. 3,000, commission @ 4% and
delcredere commission 1% on sales. He also reported a shortage of 2,000 litres due to leakage.
One of the customers who purchased 2,000 liters on credit become insolvent and only 50%
recovery was made from him. Pass the entries and prepare consignment account in the books of
Salman chemicals.
14. B of Lahore consigned 100 cases of toys to A of Mardan which cost him 100 per case. He
incurred the following costs: packing Rs. 200, carriage Rs. 300 and Railway freight Rs. 400.
Some of the cases were damaged in transit and A took delivery of 90 cases only. A spent Rs. 100
for cartage and Rs. 600 for godown rent and sold the consignment at Rs. 120 per case. He sent
the net amount to B after deducting his expenses and commission at the rate of 5% on the sale
proceeds together with his Account Sales. B also received Rs. 600 from the Railway as damages.
Show the transactions would appear in books of B.
15. 1000 Books were consigned by Ilmi Markas of Lahore to Bilal Books shop. of Sialkot at an
invoice cost of Rs. 1,000 each. Ilmi Marks. paid freight Rs. 20,000 and insurance Rs. 4,000.
During the voyage 100 books were totally damaged by fire and had to be thrown. Bilal of Sialkot
took delivery of the remaining books and paid Rs. 30,000 as customs duty.
Bilal had sent a bank draft of Rs. 600,000 to Ilmi Maks as advance payment and later sent an
account sales showing that 800 books were sold at Rs. 1,500 each. Expenses incurred by Bilal on

godown rent and advertisement, etc. amounted to Rs. 6,000. Bilal is entitled to a commission of
5%. One of the credit customers could not pay the cost of 5 bicycles.
Prepare the consignment account, A & Co. Account and Profit and Loss Account in the books of
Ilmi Markaz assuming that nothing has been recovered from the insurance company due to a
defect in the policy. Bilal settled their account immediately.
16. Khurram & Co. of Gujranwala sent goods on consignment to B & Co. of Lahore at an
invoice price of Rs. 60,000 and paid for freight 1,600, cartage R. 504 and insurance Rs. 1,400.
3/4th of the goods were sold by agent for Rs. 52,500 , subject to his commission of Rs. 1,800,
storage expenses of Rs. 800 and other selling expenses of Rs. 400. 1/8th of the consignment was
lost by fire and claim of Rs. 5,000 was recovered.
Draw up the necessary accounts in the books of Khurram & Co. and ascertain the profit or loss
made on consignment. The consignor received a two month’s bill of exchange from the agent in
satisfaction of the dues.
17. X Ltd. of Sialkot sent on consignment goods to Y Ltd. of Karachi with following details.
Insurance price Rs. 15,000,000

Freight charges Rs. 37,500
Insurance cost Rs. 25,000
Other charges Rs. 25,000
Y Ltd. sold one half of the goods for Rs. 8,750,000. The detail of expenses of Y. Ltd is given
below:
Sales commission 5%
Storage expenses Rs. 100,000
Marketing expenses Rs. 175,000
Unfortunately one fourth of the consignment was lost by fire prior to the storage of the goods.
The insurance company settled the claim for Rs. 2,500,000. X Ltd received a 3 months bills of
exchange from Y. Ltd. in settlement of the dues.
Required: Draw up Consignment Account, Y Ltd. account and abnormal loss account in
the books of A Ltd.
18. A of Lahore consigned 500 mobile sets costing Rs. 2,000 each to B of Sialkot on 1st March,
2010. The expenses on consignment were freight Rs. 10,000 insurance Rs. 5,000, carriage Rs.
1,000.
B received the delivery of 470 mobile sets. An account sales dated 30th June, 2010 showed that
395 sets were sold for Rs. 1,500,000 and B incurred Rs. 4,700 for carriage Rs. 12,000 for
godown rent, B was entitled to a commission @ 6% on sales. B incurred expenses amounting to
Rs. 5,600 for repairing the damaged radio sets remaining in the stock.

Mr. A lodged a claim with insurance company which was admitted at Rs. 45,000. Show the
necessary accounts in the Books of A.
19. Bilal & Co. at Gujranwala sends regular consignment to Messrs. Ramzan & Co. of Lahore
who is agents for selling the goods at the risk of the Bilal & Co. and are entitled to a commission
of 15 paise per unit of sold (This includes delcredere commission).
Stock of goods with the agent at the beginning- 20,000 units costing Rs. 100,000.
Total quantity of goods consigned 160,000 units at Rs. 8 per Kg.
Total quantity of Jute goods sold 1,50,000 units at Rs. 10 per Kg.
Total remittances by the agent Rs. 12,00,000.
Railway freight paid by the agents Rs. 80,000.
Of the sales Messrs. Ramzan & Co. Lahore could not collect Rs. 30,000 due to insolvency of a
customer. 5,000 units of goods were damages in Railway transit for which the agents recovered
Rs. 16,000. The damaged goods were sold at the rate of Rs. 4 per unit. Record the above
transactions in the books of the Bilal & Co at Gujranwala and find out the profit or loss if any.
20. Dildar consigned 5,000 Kgs of Vanaspati Ghee to Sardar. Each Kg. Vanaspati Ghee costs Rs.
16. Dildar paid Rs. 100 as carriage, Rs. 500 as freight and Rs. 400 as insurance. During transit
500 Kgs of Vanaspati Ghee was accidentally spoiled for which the insurance company paid
directly to the consignee, Rs. 5,000 in full settlement of the claim
After three months from the date of the consignment, Sardar reported that 3,500 Kgs. Of
Vanaspati Ghee as sold at Rs. 19 per Kg. and expenses being on ground rent, Rs. 1,000 and on
salesman’s salary, Rs. 1,500. Sardar is entitled to a commission of 5% on sales. Sardar also
reported a loss of 20 Kgs. of Vanaspati Ghee due to leakage. Prepare the necessary accounts in
the books of Dilawar.
21. On 1st January, 2009 Messrs Abdullah & co. Lahore sent 100 cycles to Nazir of Gujarat on
consignment basis. The cost of each cycles was Rs. 6,000 and was invoiced to Nazir. The
expenses were paid by Messrs Abdullah & co. freight Rs.3,500; insurance Rs.1,500. During in
transit, one cycle was destroyed by fire and the insurance company admitted Rs 4,500 as claim.
Nazir sold 7 cycles for Rs. 7,500 each and paid for storage and insurance Rs.1,700. Nazir then
accepted a bill for three months for Rs 45,000 drawn upon him. It is agreed Nasir to get
commission @ 5%
Give the consignment account in the books of Abdullah & Co.
22. On 1st October, 2010 Mr. Sahil of Karachi sent 200 units of a product to Mr. Ahmad of
Lahore. The goods were invoiced at Rs. 300 so as to yield a profit of 50% on cost. Mr. Sahil
incurred Rs. 4,000 on freight and insurance. Mr. Ahmad incurred Rs. 2,000 on freight and Rs.
3,200 on rent. Up to 31st December, 2010 he sold 100 units for cash at Rs. 320 per unit and 40
units for Rs. 350 on credit. He charged his commission 6% (including delcredere) and remitted

Advanced Financial Accounting P a g e | 10
the balance on 31st December 2010 and reported that 20 units were damaged on account of bad
packing and he could sell them only for Rs. 160 per unit. One of the customers to whom goods
of Rs. 2,000 were sold on credit failed to pay his debts due to insolvency. Make consignment
account in the books of Mr. Soahil assuming that the accounting year ends on 31st December
every year.
PROBLEMS
1. Rauf & Co. of Lahore consigned to Farooq of Gujrat, 60 boxes of toys at Rs. 400 per box. The
consignor paid carriage and insurance of Rs. 2,000. Farooq sent Rs. 10,000 as advance payment.
Rauf & Co. received an Account Sales from Farooq containing the following particulars:
d) Gross sales proceeds are Rs. 34,000
e) Transportation and warehousing charges are Rs. 1,500
f) Commission at 15% on gross proceeds.
Rauf & Co. received bank remittance for the balance due from Farooq on the consignment. Pass
the Journal entries and the necessary ledger Accounts in the books of consignor and consignee.
Ans. Profit on consignment Rs. 1,400
2. Karim & Co. of Karachi sent on consignment to Salman & Sons. of Lahore 60 cases of
Cutlery goods costing Rs. 175 per case. Expenses incurred by the consignor at Karachi are:
Freight Rs. 275; insurance Rs. 55; Loading charges Rs. 20
Karim & Co. Draw on Salman & Sons. 2 months bill at sight for Rs. 7,000 which the latter
accepts. The charges paid by Salman & Sons. at Lahore were: unloading charges Rs. 30; storage
Rs. 85; insurance Rs. 15. Commission is payable to Salman & Sons at 2% on all sales in addition
to 1-1/2% delcredere commission.
The consignor sells for prompt cash 30 cases @ Rs. 225 per case; 25 cases @ Rs. 250 per case
and the balance @ Rs. 280 per case. The account was settled immediately by means of a bank
draft.
Write up the transactions and ledger accounts in the books of both the parties.
3. On 1st July 2010 P & Co. sends 300 cases of medicines to Zeeshan on consignment basis. The
cost of each case was Rs. 1,000. P & Co. incurred the following expenses on the consignment:
Rs. 750 on railway freight and Rs. 450 on insurance.
200 cases were sold by Zeeshan uniformly at Rs. 2,000 per case. Out of these 10 cases were sold
to a party on credit and full amount ultimately proved bad. The expenses of Zeeshan amounted to
Rs. 1,200. He sent an account sale on 31st December 2010 which revealed that he charged 5% as
ordinary commission and 10% as delcreder commission. He sent a bank draft for Rs. 90,000.

You are required to prepare Consignment Account, Zeeshan’s Account and goods sent on
Consignment Account in the books of P & Co.
4. Global Co. of Karachi sent 1,000 cases of Homeopathic medicines to Zahid & Bros. of
Rawalpindi at Rs. 100 per case. Expenses on the Consignment incurred by the consignor
amounted to Rs. 3,000. Zahid & Bros. in Rawalpindi were working as delcredere agents. Their
commission is 5%; Delcredere Commission is 7-1/2%.
Exactly after six months an Account Sales was received by Global Co. giving the following
information.
f) Sales proceeds of 750 cases Rs. 150,000
g) Stock of unsold goods in hand 250 cases
h) Commission charged at agreed rates of 5% + 7 ½%
i) Consignee’s expenses amounted to Rs. 1,200
j) A bank draft Rs. 100,000 was sent by Zahid bros. along with the account sales.
You are asked to give the necessary entries in the books of the consignor to record the above
transactions.
5. On 1st March 2010, Karim Bux consigned cloth to the value of Rs. 650,000 at cost to Afzal &
Sons, his agent in Multan. Who accepted a 3 months draft for 80% of the normal selling price.
The draft was discounted at a cost of R. 13,000.
Karim Bux paid Rs. 35,000 as freight and Rs. 6,500 as insurance. On 30th September 2010, Afzal
& Sons notified Karim Bux that 4/5th of the goods had been sold for Rs. 824,000 and that the
selling expenses were Rs. 12,100.
Karim Bux normal selling price was cost plus 50% and Afzal & Sons’ were entitle to a
commission at the rate 10% on normal selling price plus 25% of any surplus price above normal.
Ans. Profit on consignment Rs. 169,700; Commission Rs. 89,000
6. Mr. M in Sialkot consigned to Mr. R in Wwa, goods to the value of Rs. 75,000 (cost Rs.
60,000), paying freight charges Rs. 5,000 and draws a bill on Mr. R for Rs. 30,000. 3/4 th of this
consignment was sold by Mr. R for Rs. 70,000 and expenses Rs. 6,000 were incurred. Mr. R is
also entitled to a commission of 6% on sales. Mr. R remitted to Mr. M, the net amount held for
his account by means of a sight draft. Show the ledger accounts in the books of Mr. M.
Ans. Profit on consignment Rs. 11,050.

7. On 1st January 2010 Mr.C of Lahore consigned to D of Sargodha goods for sale at invoice
price .Mr.D is entitled to a commission of 5% on invoice price and 10%of any surplus price
realized. goods costing Rs 24000 were consigned to Sargodha at the invoice price of Rs
28000,the expenses of consignment amounted to Rs 2000.on 31st March 2010 an account sales
was received from Mr.D showing that he had affected sales of Rs 24000 in respect of 3/4 of the
quantity of goods consigned to him. The expenses incurred by him amounted to Rs.1, 200; Mr. D
remitted the amount due by a bank draft,
Prepare consignment account goods sent on consignment account and Mr. D’s account in
the book of Mr.C and show the manner in which the books would be closed on 31 st March
2010
8. On 1st January, 2010 Ahmad of Lahore consigned to Babar of Multan goods for sale at invoice
price. Babar is entitled to commission of 5% on invoice price and 20% of any surplus price
realized. Goods invoiced to Babar at Rs. 144,000 so as to give a profit of 20% on cost. The
expenses of the consignment amounted to Rs. 7,500. On 31st March, 2010, an Account Sales was
received from Babar showing that he had affected sales of Rs. 120,000 in respect of 2/3 of the
quantity of goods consigned to him. His actual out of pocked expenses amounted to Rs. 8,400.
Babar accepts a bill drawn by Ahmad for Rs. 40,000 and remitted the balance due from him in
cash.
Give consignment Account and Babar’s account in the books of Ahmad.
9. Rizwan of Gujranwala sent 100 sewing machines to Aslam of Hong Kong at R. 650 (Rs. 800
invoice price) per machine. The consignor paid Rs. 2,000 for packing and dispatching charges.
Aslam, immediately after receiving the consignment accepted a bill for Rs. 40,000. After some
time Aslam reported that 80 machines were sold for Rs. 875 each and expenses being on freight,
Rs. 3,000 on godown rent, Rs. 250 and on insurance Rs. 500. Aslam is entitled to a commission
of 9% on sales. Due to insolvency of a customer who purchased 4 machines failed to pay
anything. Another customer reduced Rs. 250 due to the defects in the machines purchased.
Show consignment Account, Aslam Account and goods sent on consignment Account.
10. On 1st Jan. 1990 Razaq & Co. of Lahore consigned to Mushtaq & Co. of Mardan 100 cycles
at Rs. 500 each which was 20% above their cost price. Razaq & Co. had paid Rs. 200 for
packing etc., Rs. 50 for insurance and Rs. 250 for carriage. On 1st March 1990, Mushtaq & Co.
sold 75 cycles for Rs. 45,000 the expenses thereon being Rs. 2000. Mushtaq & Co. are entitled
for commission of 5% and 2% (delcrader) on sales and they remitted Rs. 30,000 on account. One
customer who purchases 5 cycles failed to pay his debts due to his insolvency. Pass the necessary
entries and prepare the necessary ledger accounts in books of Razaq & Co.

11. Zaheer & Sons of Karachi dispatched a consignment of 400 cases of electric bulbs to
Hammad of Kohat on 1st December 2010. The invoice price was quoted at Rs. 180,000 so as to
give a profit of 25% on cost. On 25th December Hammad sent an account sales with the
following details:
f) 75% of the goods were sold.

g) Hammad paid unloading charges Rs. 1,200
h) Advertisement and selling expenses paid by Hammad amounted to Rs. 700
i) Hammad is to receive a commission of 5% on sales.
j) A bank draft was sent for the amount due.
At the time of dispatch Zaheer & Sons incurred an expenditure of Rs. 2,000 towards freight and
insurance charges.
Prepare necessary ledger accounts in the books of the consignor.
12. On 1st Jan. 1994, Mohsin Coal Co. of Quetta consigned to Ramazan Ltd. of Lahore 10,000
tons of coal. The cost of coal was Rs. 40 per ton and railway charges were Rs. 10 per ton. On
25th Feb. an Account sales was received from Ramazan Ltd. showing that 5000 tons of coal sold
@ Rs. 80 per ton; sales expenses Rs. 4000, Insurance Rs. 1000, Brokerage 2% and commission
3% on sales. The agent enclosed a bill for the sales proceeds less expenses and reported a
shortage of 100 tons on the whole consignment. show the consignment account in books of
Mohsin Coal Co.
13. On 1st Jan. 2010 Saleem Chemicals of Lahore sent 100,000 litres of chemical to Furqan of
Faisalabad at a cost of Rs. 13 per litre. They paid carriage Rs. 8,000 and octroi duty Rs. 1,000.
Furqan received the consignment and unloading charges amounted to Rs. 1,000 were paid. On
28th Feb. 2010, Furqan sent an account sales showing 80,000 litres of chemical sold @ Rs. 16 per
litre, selling expenses incurred Rs. 4,000, godown rent Rs. 1,500, commission @ 4% and
delcredre commission 1% on sales. He also reported a shortage of 2,000 litres due to leakage.
One of the customers who purchased 2,000 litres on credit become insolvent and only 50%
recovery was made from him. Pass the entries and prepare consignment account in the books of
Saleem chemicals.
14. Bilal of Lahore consigned 100 cases of candles to Abdullah of Mardan which cost him 50 per
case. He incurred the following costs: packing Rs. 100, carriage Rs. 150 and Railway freight Rs.
200. Some of the cases were damaged in transit and Abdullah took delivery of 90 cases only.
Abdullah spent Rs. 50 for cartage and Rs. 300 for godown rent and sold the consignment at Rs.
60 per case. He sent the net amount to Bilal after deducting his expenses and commission at the
rate of 5% on the sale proceeds together with his Account Sales. Bilal also received Rs. 300 from
the Railway as damages. Show the transactions would appear in books of Bilal.
Ans. Loss on consignment Rs. 125, Loss in Transit Rs. 245

15. 1000 bicycles were consigned by Sohrab & Co. Ltd. of Lahore to A & Co. of Colombo at an
invoice cost of Rs. 500 each. Sohrab & Co. Ltd. paid freight Rs. 10,000 and insurance Rs. 2,000.
During the voyage 100 bicycles were totally damaged by fire and had to be thrown overboard. A
& Co. took delivery of the remaining bicycles and paid Rs. 15,000 as customs duty.
A & Co. had sent a bank draft of Rs. 300,000 to Sohrab & Co. Ltd as advance payment and later
sent an account sales showing that 800 bicycles were sold at Rs. 750 each. Expenses incurred by
A & Co. on godown rent and advertisement, etc. amounted to Rs. 3,000. A & Co. are entitled to
a commission of 5%. One of the credit customers could not pay the cost of 5 bicycles.
Prepare the consignment account, A & Co. Account and Profit and Loss Account in the books of
Sohrab & Co. Ltd. assuming that nothing has been recovered from the insurance company due to
a defect in the policy. A & Co. settled their account immediately.
Ans. Profit on consignment Rs. 140,317: Loss in Transit Rs. 51,200
16. Khubaib & Co. of Gujranwala sent goods on consignment to A & Co. of Lahore at an invoice
price of Rs. 30,000 and paid for freight 800, cartage R. 252 and insurance Rs. 700. 3/4th of the
goods were sold by agent for Rs. 26,250, subject to his commission of Rs. 900, storage expenses
of Rs. 200 and other selling expenses of Rs. 400. 1/8th of the consignment was lost by fire and
claim of Rs. 2,500 was recovered.
Draw up the necessary accounts in the books of Khubaib & Co. and ascertain the profit or loss
made on consignment. The consignor received a two month’s bill of exchange from the agent in
satisfaction of the dues.
Ans. Profit on consignment Rs. 936
17. A Ltd. of Sialkot sent on consignment goods to Z Ltd. of Karachi with following details.
Insurance price Rs. 30,000,000

Freight charges Rs. 75,000
Insurance cost Rs. 50,000
Other charges Rs. 50,000
Z Ltd. sold one half of the goods for Rs. 17,500,000. The detail of expenses of Z. Ltd is given
below:
Sales commission 5%
Storage expenses Rs. 200,000
Marketing expenses Rs. 350,000
Unfortunately one fourth of the consignment was lost by fire prior to the storage of the goods.
The insurance company settled the claim for Rs. 5,000,000. A Ltd received a 3 months bills of
exchange from Z. Ltd. in settlement of the dues.

Required: Draw up Consignment Account, Z Ltd. account and abnormal loss account in
the books of A Ltd.
18. A of Lahore consigned 500 radio sets costing Rs. 1,000 each to B of Sialkot on 1 st March,
2010. The expenses on consignment were freight Rs. 5,000 insurance Rs. 2,500, carriage Rs.
500.
B received the delivery of 470 radio sets. An account sales dated 30th June, 2010 showed that
395 sets were sold for Rs. 750,000 and B incurred Rs. 2,350 for carriage Rs. 6,000 for godown
rent, B was entitled to a commission @ 6% on sales. B incurred expenses amounting to Rs. 2,800
for repairing the damaged radio sets remaining in the stock.
Mr. A lodged a claim with insurance company which was admitted at Rs. 22,500.
Show the necessary accounts in the Books of A.
Ans. Profit on consignment Rs. 292,905: Loss in transit Rs. 7,980
19. A Jute Mill at Gujranwala sends regular consignment of Jute foods to Messrs. Riaz & Co. of
Lahore who are agents for selling the Jute goods at the risk of the Mill and are entitled to a
commission of 15 paise per Kg of Jute goods sold (This includes delcredere commission).
Stock of Jute goods with the agent at the beginning- 20,000 Kgs costing Rs. 50,000.
Total quantity of Jut goods consigned 160,000 Kgs at Rs. 4 per Kg.
Total quantity of Jute goods sol 1,50,000 Kgs at Rs. 5 per Kg.
Total remittances y the agent Rs. 6, 00,000.
Railway freight paid by the agents Rs. 40,000.
Of the sales Messrs. Riaz & Co. Lahore could not collect Rs. 15,000 due to insolvency of a
customer. 5,000 Kgs of Jute goods were damages in Railway transit for which the agents
recovered Rs. 8,000. the damaged goods were sold at the rate of Rs. 2 per Kg. record the above
transactions in the books of the Jute Mill at Gujranwala and find out the profit or loss if any.
Ans. Profit on consignment Rs. 124,250; Abnormal Loss Rs. 3,250
20. Dilawar consigned 5,000 Kgs of Vanaspati Ghee to Sarwar. Each Kg. Vanaspati Ghee costs
Rs. 8. Dilawar paid Rs. 50 as carriage, Rs. 250 as freight and Rs. 200 as insurance. During transit
500 Kgs of Vanaspati Ghee was accidentally spoiled for which the insurance company paid
directly to the consignee, Rs. 2,500 in full settlement of the claim

After three months from the date of the consignment, Sarwar reported that 3,500 Kgs. Of
Vanaspati Ghee as sold at Rs. 9.50 per Kg. and expenses being on ground rent, Rs. 500 and on
salesman’s salary, Rs. 750. Sarwar is entitled to a commission of 5% on sales. Sarwar also
reported a loss of 20 Kgs. of Vanaspati Ghee due to leakage. Prepare the necessary accounts in
the books of Dilawar.
Ans. Profit on consignment Rs. 1,860; Loss in Transit Rs. 1,550
21. On 1st January, 2009 Messrs Ahmad & co. Lahore sent 100 cars to Nasir of Gujarat on
consignment basis. The cost of each car was Rs. 12,000 and was invoiced to Nasir .the expenses
were paid by Messrs Ahmad & co. freight Rs.7000 insurance Rs.3000.during in transit, one car
was destroyed by fire and the insurance company admitted Rs 9000 as claim. Nasir sold 7 cars
for Rs. 15000 each and paid for storage and insurance Rs.3400. Nasir then accepted a bill for
three months for Rs 90,000 drawn upon him. It is agreed Nasir to get commission @ 5%
Give the consignment account in the books of Abdullah & Co.
Ans. Profit on consignment Rs. 11,650; Loss in Transit Rs. 3,100
22. On 1st October, 2010 Mr. Sohail of Karachi sent 200 units of a product to Mr. Arif of Lahore.
The goods were invoiced at Rs. 150 so as to yield a profit of 50% on cost. Mr. Sohail incurred
Rs. 2,000 on freight and insurance. Mr. Arif incurred Rs. 1000 on freight and Rs. 1,600 on rent.
Up to 31st December, 2010 he sold 100 units for cash at Rs. 160 per unit and 40 units for Rs. 175
on credit. He charged his commission 6% (including delcredere) and remitted the balance on 31 st
December 2010 and reported that 20 units were damaged on account of bad packing and he
could sell them only for Rs. 80 per unit. One of the customers to whom goods of Rs. 1000 were
sold on credit failed to pay his debts due to insolvency. Make consignment account in the books
of Mr. Sohail assuming that the accounting year ends on 31st December every year.
Ans. Profit on consignment Rs. 3,920; Abnormal Loss Rs. 796

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ADVANCED FINANCIAL ACCOUNTING

THE STANDARD GIRLS COLLEGE

Consignor Book Consignee Book

1. When goods are send to consignee

2. Expenses paid by consignor

3. Expenses paid by consignee

4. Advance send by consignee

5. Consignment sold by consignee

6. Commission charged by consignee

7. Goods taken by consignee for personal

8. Amount send / remitted by consignee to

9. Closing Stock (only when consignment

10. Profit on consignment

Roohullah (M.Com) 0333-87 86 389 Lecturer: The Standard College

11. Loss on consignment

12. Closing the books of accounts

LEDGER ACCOUNT / NECESSARY LEDGERS / DIFFEENCT ACCOUNTS /

IN THE BOOK OF CONSIGNOR

IN THE BOOKS OF CONSINGEE

IN THE BOOKS OF CONSIGNOR

Roohullah (M.Com) 0333-87 86 389 Lecturer: The Standard College

Goods sent on Consignment A/c

IN THE BOOKS OF CONSIGNEE

Roohullah (M.Com) 0333-87 86 389 Lecturer: The Standard College

Freight Rs. 140; insurance Rs. 30; Loading charges Rs. 10

Roohullah (M.Com) 0333-87 86 389 Lecturer: The Standard College

Show these transactions in the ledger of both the parties.

Roohullah (M.Com) 0333-87 86 389 Lecturer: The Standard College

Give consignment Account and Ahmad’s account in the books of Bilal.

Roohullah (M.Com) 0333-87 86 389 Lecturer: The Standard College

a) 75% of the goods were sold.

Prepare necessary ledger accounts in the books of the consignor.

Roohullah (M.Com) 0333-87 86 389 Lecturer: The Standard College

Insurance price Rs. 15,000,000

Roohullah (M.Com) 0333-87 86 389 Lecturer: The Standard College

Total quantity of goods consigned 160,000 units at Rs. 8 per Kg.

Total remittances by the agent Rs. 12,00,000.

Railway freight paid by the agents Rs. 80,000.

Roohullah (M.Com) 0333-87 86 389 Lecturer: The Standard College

Ans. Profit on consignment Rs. 1,400

Freight Rs. 275; insurance Rs. 55; Loading charges Rs. 20

Ans. Profit on consignment Rs. 2,916

Roohullah (M.Com) 0333-87 86 389 Lecturer: The Standard College

Ans. Profit on consignment Rs. 138,000

Show these transactions in the ledger of both the parties.

Show these transactions in the ledger of both the parties.

Ans. Profit on consignment Rs. 169,700; Commission Rs. 89,000

Ans. Profit on consignment Rs. 11,050.

Roohullah (M.Com) 0333-87 86 389 Lecturer: The Standard College

Ans. Profit on consignment Rs. 1,950

Give consignment Account and Babar’s account in the books of Ahmad.

Ans. Profit on consignment Rs. 17,000

Ans. Profit on consignment Rs. 8,225

Roohullah (M.Com) 0333-87 86 389 Lecturer: The Standard College

f) 75% of the goods were sold.

Prepare necessary ledger accounts in the books of the consignor.

Ans. Profit on consignment Rs. 17,150

Ans. Loss on consignment Rs. 125, Loss in Transit Rs. 245

Roohullah (M.Com) 0333-87 86 389 Lecturer: The Standard College