Consignment means:- to send the material by the owner of the material to some one else to sell the material on his behalf.

The person who sends the goods is called consignor and the person who receives the goods for sale is called the consignee. In consignment all the payments relating to consigned goods are received on behalf of the consignor. All the expenses are borne by the consignor. The consignee gets his commission after the material is sold. In case of consignment, the ownership is never transferred to the agent or consignee.

A) Accounting Entries of Consignment In the Books of the Consignor

When the material is transferred to the consignee:-

Type of Voucher to be Prepared:-  Journal Voucher

Debit:  Consignment Account

Credit:  Goods Sent on Consignment Account

Any expenses incurred by the consignor on dispatch of material:-

Type of voucher to be prepared:-  Payment Voucher

Debit:  Consignment Account

Credit:  Cash Account or Bank Account

Any expenses incurred by the consignee:-

Type of voucher to be prepared:-  Journal Voucher

Debit:  Consignment Account

Credit:  Consignee’s Personal Account

When any sale is done by the consignee:-

Type of voucher to be prepared:- Journal Voucher

Debit:  Consignee’s Personal Account

Credit: Consignment Account

Any payment received from the consignee:-

Type of voucher to be prepared:-  Receipt Voucher

Debit:  Cash or Bank Account

Credit:  Consignee’s Personal Account

Any commission payable to consignee:-

Type of voucher to be prepared:-   Journal Voucher

Debit: Consignment Account

Credit:– Consignee’s Personal Account

Any payment made to consignee:-

Type of voucher to be prepared :-  Payment Voucher

Debit: Consignee’s Personal Account

Credit:  Cash or Bank Account.

If any stock is unsold or closing stock of Consignment:-

Type of voucher to be prepared:- Journal Voucher

Debit: Stock on Consignment Account

Credit: Consignment Account

If There is a profit on consignment:-

Type of voucher prepared:-  Journal Voucher

Debit: Consignment Account

Credit:  Profit and Loss Account.

If there is a loss on consignment:-

Type of voucher to be prepared :-  Journal Voucher

Debit: Profit and Loss Account

Credit: Consignment Account

B) Accounting Entries of Consignment In the Books of the Consignee

When the goods received by the consignee:– No entry will be made by the consignee.

Any expenses incurred by the consignee in respect of consignment:-

Type of voucher to be prepared:- Payment Voucher

Debit:  Consignor’s Personal Account

Credit:  Cash or Bank Account

In case of cash sales of goods:-

Type of Voucher to be prepared:- Receipt Voucher

Debit: Cash or Bank Account

Credit: Consignor’s Personal Account

In case of credit sales:-

Type of voucher to be prepared:- Journal Voucher

Debit: Customer’s Account

Credit: Consignor’s Personal Account

Any payment made to the consignor:-

Type of voucher to be prepared:- Payment Voucher

Debit: Consignor’s Personal Account

Credit: Cash or Bank Account

Amount of Commission receivable by the consignee:-

Type of voucher to be prepared:- Journal Voucher

Debit: Consignor’s Personal Account

Credit: Commission  Account

If commission is received in cash or through bank:-

Type of Voucher to be prepared:- Receipt Voucher

Debit: Cash or Bank Account

Credit:  Commission Received Account

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