CMA Foundation · Fundamentals of Financial and Cost Accounting · Consignment
In the books of the consignor, which of the following is the correct journal entry when goods costing Rs 40,000 are sent to an agent on consignment?
The consignor debits Consignment Account and credits Goods Sent on Consignment Account with the cost of Rs 40,000. This is because the transfer is not a sale; the consignor still owns the goods, so only a memorandum-type transfer to the consignment account is recorded.
- AConsignment A/c Dr. 40,000 to Goods Sent on Consignment A/c 40,000Correct
- BConsignee A/c Dr. 40,000 to Sales A/c 40,000
- CGoods Sent on Consignment A/c Dr. 40,000 to Consignment A/c 40,000
- DConsignment A/c Dr. 40,000 to Consignee's Personal A/c 40,000
Explanation
On dispatch, no sale occurs and ownership stays with the consignor. Consignment A/c is debited and Goods Sent on Consignment A/c is credited at cost. The reverse entry in option 3 reverses the debit and credit sides.
Did you get it right without looking?
One question tells you little. A timed set on Consignment shows your real accuracy, how long you take and where you lose marks.
More Consignment questions
- In consignment accounts, the closing stock lying unsold with the consignee is valued at which of the following?
- Which statement about the Account Sales sent by a consignee to the consignor is correct?
- In the books of the consignor, which of the following correctly describes the nature of the account sent by the consignee to the consignor p…
- Mahesh Traders of Pune sends goods to its agent in Jaipur to be sold on consignment. What is the correct journal entry in the consignor's bo…
- Which statement about an account sales is correct?
- Ganga Mills consigned goods to an agent at an invoice price of ₹1,25,000, which is cost plus 25%. At the year end, the unsold stock with the…