CAclubindia Online Learning offers a wide variety of online classes and video lectures for various professional courses such as CA, CS, CMA, CISA as well as various certification courses on GST, Transfer Pricing, International Taxation, Excel, Tally, FM, Ind AS and more. know more
Jag Bhushan Sharma (Faculty in a B-School) 25 November 2009
Consignment Sale - Since consignor remains the legal owner of the goods sent on consignment, consignee should not be debited until he informs the consignor of having made the sale. So entry at the time of sending goods would be as follows at cost price.
Consignment A/c Dr.
To Goods Sent on Consignment
Goods Sent on Consignment A/c Dr.
To Purchase A/c or Trading A/c
For transferring goods to branch office the entry will be at cost price (though entry can be made at invoice price, then a reverse entry will be passed for the profit element called load). The same treatment could be given in case of consignment a/c also.
Branch A/c Dr.
To Goods Sent to Branch A/c
CA. Rishabh Mittal (CA in Practice) 25 November 2009
CONSIGNMENT - It is to be noted that legal owner to goods is consignor only. Therefore, he'll maintain seperate account for consignment (Just like seperate trading & P/L account for consignment related goods).
1. On goods transff. to consignee - Dr. Consignment A/c Cr. Goods sent on Consignment A/c
Since goods are segregated to consignment from general trading a/c, therefore
Dr. Goods sent on consignment Cr. Trading A/c
2. On Sale on Goods on Consignment
Dr. Consignee A/c Cr. Consignment A/c
Jag Bhushan Sharma (Faculty in a B-School) 26 November 2009
No problem, I try to explain in a layman's language. When a firm employs somone as agent and sends goods for sale, the agent does not become owner of the goods. The sender i.e. consignor remains owner. As an analogy consignment account can be compared with Trading and P& L A/c. Just as all the expenses are debited to Tradeing/P&L A/c, similarly all the expenses incurred on account of the consignment are debited to consignment account inclusing the cost of goods sent. On receipt of goods the consignee will not make any entry in his books since they don't belong to him.
When goods are sold, the consignee informs consignor about the sale. On receipt of such information, the consignor makes this entry - Consignee A/c Dr. to Consignment A/c. Logic behind this is that since all expenses of consignment are debited to Consignment A/c all incomes will be credited to Consignment A/c. Secondly now consignee is in possession of consignor's money, that is why he is debited. At this point in time, the consignee will make this entry in his books. Cash/Bank A/c Dr. to Consignor. Consignor is credited because consignee is in possession of money actuall belonging to consignor. I hope now it should be clear.
Anil Kumar (Sr. Accountant ) 25 February 2010
Thanx for such valuable information.
Still some questions ?
a) who will raise the invoice (TIN No. .....which one) to customer - conignor or consignee ?
b) who will make the entry of sale ?
email@example.com (firstname.lastname@example.org) 16 August 2011
i would like to send goods on consignment from delhi to hyderabad through a courier company. TNT specifically. Now how do i send the goods to the stores without getting into entry forms etc , and proper invoices. The issue is with these retailers/, they have never provided anyone with entry forms and would only let me generate an invoice after one month, when sales actually happen .. please help