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Accounting in Consignor's Books 📒

The Consignor wants to know: "Did I make a Profit or Loss on this shipment?" He opens a special Nominal Account called Consignment Account.

Format of Consignment Account 📊

Think of it like a Trading & P&L Account combined.

  • Debit: All Costs (Goods sent, Expenses, Commission).
  • Credit: All Revenues (Sales, Closing Stock).
Particulars (Debit)₹Particulars (Credit)₹
To Goods Sent on Consignment1,00,000By Consignee A/c (Sales)1,50,000
To Bank A/c (Consignor's Exp)5,000By Stock on Consignment20,000
To Consignee A/c (His Exp)2,000
To Consignee A/c (Commission)10,000
To P&L A/c (Profit)53,000
Total1,70,000Total1,70,000

Key Journal Entries 📝

1. Sending Goods:

Consignment A/c ...Dr.
    To Goods Sent on Consignment A/c

2. Consignor's Expenses:

Consignment A/c ...Dr.
    To Bank A/c

3. Consignee's Expenses & Commission:

Consignment A/c ...Dr.
    To Consignee A/c
(We credit Consignee because we owe him this money)

4. Sales made by Consignee:

Consignee A/c ...Dr.
    To Consignment A/c
(We debit Consignee because he owes us the sales money)

5. Closing Stock:

Stock on Consignment A/c ...Dr.
    To Consignment A/c
Consignee Personal Account

Apart from Consignment A/c, we also maintain Consignee's Personal A/c. Debit side: Sales. Credit side: Expenses, Commission, Advance. Balance: Amount he must pay us.

Quiz Time! 🎯

Test Your Knowledge

Question 1 of 5

1. Consignment Account is a:

Personal Account
Real Account
Nominal Account
None

💡 Final Wisdom: "Consignment Account is the scorecard. If the Credit side is heavier, you won! (Profit). If Debit is heavier, you lost." ⚖️

Next up: Accounting in Consignee's Books - The Agent's view! 🧾

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