A consignment account is a combined form of trading and profit and loss account solely to the concerned consignment. It can be treated as nominal account. An independent consignment account for each and consignment to the name of place or consignee is to be prepared in order to ascertain the profit or loss from that consignment.
In order to keep complete record of consignment transactions, the consignor maintains the following accounts:
* Consignment Account
* Consignee's Account
* Goods sent on consignment Account
The following entries are made in the books of the consignor for goods sent at proforma invoice price or cost price:
1. For the goods sent on consignment
Consignment to .........A/C......................Dr.
To Goods sent on consignment A/c
2. For the expenses incurred by consignor
Consignment to.........A/C..............Dr.
To Bank A/C
3. For the advance received from consignee
Bank/Cash/Bills receivable A/C............Dr.
To Consignee's A/C
4. For the bills discounted
Bank A/C...................Dr.
To Bills receivable
5. For discount on bills transferred to profit and loss account
Profit and loss A/C...................Dr.
To Discount A/c
6. For expenses paid by consignee
Consignment to..............A/c.................Dr.
To Consignee's A/c
7. For the goods sold by consignee
Consignee's A/c.................Dr.
To consignment to.................A/c
8. For the commission due to consignee
Consignment to .................A/C
To consignee's A/C
9. For closing stock with consignee
Consignment stock A/C...........Dr.
To consignment to.......A/c
10. For profit or loss on consignment
For profit earned on consignment
Consignment to........A/C..................Dr.
To Profit and loss A/C
For loss on consignment
Profit and loss A/C.....................Dr.
To consignment to.............A/C
11. For final settlement of account with consignee
Bank A/c...............Dr.
To Consignee's A/c
12.For goods sent on consignment transferred to trading account(by a manufacturing company) or purchase account(by a trader)
Goods sent to consignment A/C..............Dr.
To trading/ purchase A/C
