Consignment: Practical Problems 🧮
Let's solve a Master Problem involving Valuation, Abnormal Loss, and Consignment Account.
Problem 📝
A (Mumbai) sent 1,000 cases of goods @ ₹100 each to B (Delhi).
- A paid Freight: ₹5,000.
- In transit, 100 cases were lost (Abnormal Loss). Insurance claim: ₹8,000.
- B took delivery of remaining 900 cases.
- B paid: Unloading ₹1,800, Godown Rent ₹3,000.
- B sold 700 cases @ ₹200 each.
- B is entitled to 10% Commission on Sales.
Prepare Consignment A/c.
Working Notes 📒
1. Valuation of Abnormal Loss (100 cases):
- Cost (100 × 100) = 10,000
- (+) Prop. A's Exp (5,000 × 100/1000) = 500
- Total Value = ₹10,500.
2. Valuation of Closing Stock (200 cases): (Total 1000 - 100 Lost - 700 Sold = 200 Unsold)
- Cost (200 × 100) = 20,000
- (+) Prop. A's Exp (5,000 × 200/1000) = 1,000
- (+) Prop. B's Direct Exp (1,800 × 200/900) = 400
- (Note: B's exp is divided by 900 because he received only 900 cases).
- Total Value = ₹21,400.
3. Commission:
- Sales = 700 × 200 = ₹1,40,000.
- Commission = 10% of 1,40,000 = ₹14,000.
Consignment Account (In Books of A) 📊
| Particulars | ₹ | Particulars | ₹ |
|---|---|---|---|
| To Goods Sent on Consignment | 1,00,000 | By B's A/c (Sales) | 1,40,000 |
| To Bank (Freight) | 5,000 | By Abnormal Loss | 10,500 |
| To B's A/c (Exp: 1800+3000) | 4,800 | By Stock on Consignment | 21,400 |
| To B's A/c (Commission) | 14,000 | ||
| To P&L A/c (Profit) | 48,100 | ||
| Total | 1,71,900 | Total | 1,71,900 |
🎉 UNIT II COMPLETE! You have mastered Consignment. From sending goods to calculating complex stock valuations.
Next epic: Unit III: Joint Venture Accounts - A temporary partnership! 🤝