Consignment Accounts

 Consignment accounts are petty trading and profit and loss account where we ascertain the profit or loss by sending goods to an agent known as a consignee. Consignment account goods sent on consignment account, consignees account, consignment debtors accounts are the accounts kept by the consignor while the consignee does not keep any accounts. He only prepares a document known as account sales describing the cash and credit sales,

expenses and commissions due, and remittance to the consignor. It is from this statement that the consignor prepares the accounts kept by him. Goods received by the agent belong to the consignor and not his. He sells other goods on cash and credit terms and collects money from debtors and sends them to the consignor after deduction his dues.

Consignees Account

This is a personal account. The debtor and creditor relationships are here. Debits will show how much is receivable from the consignee and credits will show how much is payable to the consignee.

• Credits

Expenses met by the consignee.

Remittances sent to the consignor and the balance due to the consignor.

Commissions due to the consignor.

• Debits

Bad debts applicable to consignees.

Cash sales amounts collected the consignment debtors by the consignee.

Consignment accounts

• Credits

Cash and credit sales, Value of the closing stock.

Prepositional cost of the goods returned by the consignee.

• Debits

Bad debts if shared by both parties or by him

profit or loss on  the consignment

cost of the goods sent to the consignee

the consignee's expenses such as duty, advertising charges, Transport charges, Delling and distribution expenses, and his commission.

All expenses incurred in sending the goods to a consignee

The cost of goods sent to the consignee is debited to the consignment account and credited to goods sent on the consignment account. The cost of the goods sent to the consignee is credited to the general trading account and debited to goods sent on the consignment account.

Two Parties: Consignment accounting mainly involves two party’s consignor and consignees.

Transfer of Procession: Procession of goods transferred from consignor to consignee.

Agreement: There is a pre-agreement between the consignor and consignee for the terms and conditions of the consignment.

No Transfer of Ownership: The ownership of goods remains in the hands of the consignor until the consignee sells it. The only procession of goods is transferred to a consignee.

Re-Conciliation: At the end of the year or periodic intervals consignor sends a Pro-forma invoice while the consignee sends account sale details and both reconcile their accounts

Separate Accounting: There is independent accounting done of consignment account in the books of consignor and consignee. Both prepare consignment account and record the journal entries of goods through consignment account only.