Advanced accounting by baysa lupisan chapter 05

To record consignment sales.. Consignor financial statements: Statement of Financial Position – Assets section Statement of Recognized Income and Expenses Exercise 5-3 Requirement 1 – Co

EXERCISES Exercise 5 – 1

To record transfer of merchandise to consignee

To record consignment sales

To record cost of goods sold

To record return of consigned goods

or

To record cost of goods sold

To record return of consigned goods

Exercise 5 – 2

Commission Expense (P420,000 x 10%) 42,000

*Cost of goods sold – P420,000 /1.25 = P336,000

Freight costs – P40,000 / P500,000 = 8%

Freight on goods sold – P336,000 x 8% = P26,880

Total costs of goods sold – P336,000 + P26,880 = P362,800

Memorandum entry to record receipt of goods on consignment

3 Consignor financial statements:

Statement of Financial Position – Assets section

Statement of Recognized Income and Expenses

Exercise 5-3

Requirement 1 – Consignment profits calculated separately

Books of Consignor

2 Cash 3,500

Books of Consignee

Requirement 2 – Consignment profits not calculated separately

Books of Consignor

Unsold merchandise on consignment (6 sets @P700)

Books of Consignee

4 Purchases (P6,000 – P1,500 commission) 4,500

Exercise 5 – 4

* Number of units returned = Cost of returned units / Cost per unit

= P27,000 / P9,000

= 3

** Units shipped to consignee = Total cost of TV sets shipped / Cost per unit

= P216,000 / P9,000

= 24

Exercise 5 – 5

Expenses:

*Consignee remitt6ance and charges represent only 90% of sales in as much as the 10% commission

of the consignee has not yet been included among the charges (P364,500 + P4,500 = P369,000 / 90% = P410,000)

** The 100 units with safety device sold at P1,100 is computed as follows:

2 Cost (100 x P600) P60,000

PROBLEMS Problem 5-1

Req 1 Books of consignee; consignment sales merged with regular sales

Req 2 – Books of consignor; consignment profits calculated separately

Sales (8 sets @P2,500) P 20,000

3 Charge and Profit analysis

Charges by consignor:

Charges by consignee

Problem 5-2

Books of consignor

Returned merchandise (4 sets @P1,000)

5 Consignment – Out 5,700

Charges by consignor:

Charges by consignee

*Note: Freight and cartage on sets returned are charged against sales of the period

Books of consignee

P32,000 – P16,400 (collectible) = P15,600

Remittance

Problem 5-3

Correcting entry to bring accounts with Alejo up to date

Account sales – Alejo

Entry that should have been made for transactions of Alejo on the books of consignor:

Net effect of entries already made with Alejo for transfer of merchandise and remittance

Correcting entry to bring accounts with Burgos up to date

Account sales – Burgos

Entry that should have been made for transactions of Burgos on the books of consignor:

Net effect of entries already made with Burgos for transfer of merchandise and remittance

Problem 5-4

Entries to bring account with Domingo up to date

1 Cash 5,100

Remittance for 10 sets less charges

Unsold units previously recognized as sales

Merchandise returned and still in transit

Entries to bring account with Estrella up to date

Unsold units in the hands of consignee

Expenditures related to unsold consigned goods

charged to expense

Entries to bring account with Fajardo up to date

Closing Entries

3 Income Summary 72,219

2

Moonstar Company Statement of Financial Position December 31, 2008

Receivables – Consignees

Inventories:

Current Liabilities:

Retained Earnings

MULTIPLE CHOICE

8 C Sales 7 x 12 x P2,000 P168,000

P 55,590

Charges:

÷ 85%

Expenses:

14 B Cost (40 x P200) P 8,000

Charges:

÷ 85%

Cost and expenses:

Consignee charges, excluding the 15% commission

÷ 85%

Expenses:

21 C Sales P4,800

Expenses:

Expenses:

Charges by consignor

Baby dresses:

Expenses:

29 C Sales (15 x P1,500) P22,500

Expenses:

÷ 80%

38 B Sales P4,200

Expenses:

Charges:

Expenses: