Journal Entries in the books of Consignor and Consignee

The consignee receives the goods from the Consignor. It is an inward consignment to the Con­signee. An inward consignment is the receipt of goods by the Consignee from the Consignor for the purpose of sale on commission basis. Consignee is not the owner of the goods.

Journal Entries:

Following are the set of journal entries recorded in the books of the Consignee:

(1) When the Goods is Received:

No entry

The Consignee is not the owner of the goods. He does not purchase the goods. Hence he does not include this in his book. The receipt of the goods is recorded in a Memorandum Book Consignment Inward Book.

(2) When Expenses are Incurred by the Consignee:

Consignor Account Dr.

  To Bank Account

(Being expenses paid on consignment)

(3) Advance Remitted to Consignor by Cash/Cheque/Bills Payable:

Consignor Account Dr.

  To Cash/Bank/Bills Payable A/c

(Being advance paid to Consignor)

(4) When Consignee Sold the Goods:

(a) For cash sales:

Bank Account Dr.

  To Consignor Account

(Being the cash sales of consignment)

(b) For credit sale:

Consignment Debtors Account Dr.

  To Consignor Account

(Being the credit sales of consignment)

(5) When the Commission is Due:

Consignor Accounts Dr.

  To Commission Account

(Being commission earned on sale of consignment)

(6) When the Consignee Collected the Debt from Consignment Debtors:

Bank Account Dr.

  To Consignment Debtors A/c

(Being the Collection of consignment debts)

(7) For Bad Debts if Any:

(a) If Del Credere Commission is not paid:

Consignor Account Dr.

  To Consignment Debtors A/c

(Being bad debt incurred on sales)

(b) If Del Credere Commission is paid:

Bad Debts Account Dr.

  To Consignment Debtors A/c

(Being bad debts incurred on consignment sales)

Note: Bad debts from Consignment debtors are transferred to Del Credere Commission Account and the balance of Del Credere Commission Account along with Commission account is transferred to his Profit and Loss Account.

(c) Bad debts is transferred to his Profit & Loss Account:

Del Credere Commission Account Dr.

  To Bad Debts Account

(Being bad debts transferred to Del Credere Commission Account)

(8) Closing of Del Credere Commission and Commission Account:

Commission Account Dr.

Del Credere Commission Account Dr.

  To Profit and Loss Account

(Being Commission account and balance of Del Credere account is closed by transferring to Profit and Loss Account)

(9) Settlement of Account with Consignor:

Consignor Account Dr.

  To Cash/Bank/Bill Payable A/c

(Being the amount due to Consignor is settled)