CMA Intermediate · Financial Accounting · Consignment
A consignee is entitled to 6% commission on sales. Total sales were Rs 2,50,000, including Rs 50,000 of credit sales not yet collected at the year end. The commission is payable on sales, whether realised or not. The consignee's commission to be debited to the Consignment Account is:
The commission is Rs 15,000, being 6% of total sales of Rs 2,50,000. Credit sales not yet collected are still included because the commission is payable on sales made, not on cash realised. Using only cash sales would give Rs 12,000 wrongly.
- ARs 12,000
- BRs 15,000Correct
- CRs 3,000
- DRs 18,000
Explanation
The commission is on total sales, so 6% x 2,50,000 = 15,000. Credit sales are included since they are sales made by the consignee. Taking only the cash sales (2,00,000) would wrongly give 12,000.
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