Consignment
rahul (student) (62 Points)
08 June 2014
if stock is left with consignee at the end year.then it will br credited to whick account
Nikhil Raj
(Self)
(91 Points)
Replied 09 June 2014
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Consignor Books
Accounts Effected by the Transaction » Identification & Analysis:At the end of the Current Accounting Period
Note:To avoid confusion, at times it would be convenient to support the debit and credit with logical reasoning rather than the principles of debit and credit.Alternative ExplanationTransfer of a debit balance from One a/c to a Second would result in the Second a/c being debited and the first account being credited. Therefore, since a debit balance (the value of unsold stock on consignment with the consignee) is to be eliminated from the Consignment a/c it is transferred to the "Stock on Consignment a/c" resulting in a Debit in the "Stock on Consignment a/c" and a Credit in the "Consignment a/c"At the beginning of the Subsequent Accounting PeriodThe closing stock on consignment in an accounting period would form the opening stock on consignment for the next accounting period.The debit balance in the "Stock on Consignment a/c" appearing on the assets side of the opening balance sheet is transferred to the debit side of the "Consignment a/c" at the beginning of the next accounting period. The Consignment a/c being a nominal account is created afresh for each accounting period and is closed at the end of the accounting period by transfer to the profit and loss a/c. Transfer of a debit balance from One a/c to a Second would result in the Second a/c being debited and the first account being credited. Therefore, since a debit balance (the value of unsold stock on consignment with the consignee) is to be eliminated from the Consignment a/c it is transferred to the "Stock on Consignment a/c" resulting in a Debit in the "Stock on Consignment a/c" and a Credit in the "Consignment a/c"
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The ownership of the goods is with the consignor. The consignee is no way connected to the ownership of the goods. The consignee therefore will not record the value of goods in his books of accounts. Therefore he neither records the value of opening stock with him nor the value of closing stock with him in his books of accounts.
There is no entry for this in the books of the consigneeThis does not mean that the consignee will have no record whatsoever of the goods. He does not take into his account books, but may be maintaining a stock record for the goods received and sold. |
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