DEPARTMENT OF TECHNICAL EDUCATION

ANDHRA PRADESH
Name : CH. ANURADHA
Designation : Lecturer
Branch : Commercial & Computer Practice
Institute : Govt. Polytechnic for women,
Bheemunipatnam
Year/Semester : IV semester
Subject : Accountancy-III
Sub-code : CCP-402
Topic : CONSIGNMENT ACCOUNTS
Sub Topic : Valuation of unsold stock
Duration : 50 Minutes
Teaching aids : PPT, ANIMATION
CCP402.8 TO 9 1
Objectives:

On completion of this period, you would

be able to:
 Understand the meaning of unsold stock
 Know the procedure for valuation of unsold
stock
 Pass Journal entry for unsold stock
 Posting of unsold stock

CCP402.8 TO 9 2
Recap
In the last class, we discussed about
 The preparation of “Consignment accounts”
a) In the books of Consignor:
 Passed Journal Entries
 Prepared consignment a/c, consignee’s
a/c & Goods sent on consignment a/c
b) In the books of Consignee:
 Passed Journal Entries
 Prepared Consignor’s a/c
CCP402.8 TO 9 3
What is Consignment ?

 A trader sends goods to the Agent

 To be sold by the agent
 On Trader’s behalf
 On Commission basis

CCP402.8 TO 9 4
Will all the stock on consignment be sold
 May be
 May not be

CCP402.8 TO 9 5
Meaning of Unsold stock

 Goods not sold

 Left with the consignee
 At the end of the accounting period
 Valued at Cost price or market price
 Whichever is less

CCP402.8 TO 9 6
Need for valuation of Unsold stock

 To ascertain true profit or loss on consignment

CCP402.8 TO 9 7
Cost price is

 Cost of the goods sent on consignment

Plus
 Consignor’s proportionate Non-recurring or direct
expenses
Plus
 Consignee’s Proportionate Non-recurring expenses

CCP402.8 TO 9 8
Non-recurring or direct expenses

 All expenses incurred

 By consignor or consignee
 To bring the goods
 To the godown of the consignee

Note: These expenses increase the value of the

goods

CCP402.8 TO 9 9
Direct Expenses incurred by consignor

 Freight
 Carriage and cartage
 Insurance
 Packing
 Loading charges
 Customs duty

CCP402.8 TO 9 10
Direct Expenses incurred by consignee

 Unloading charges
 Freight
 Dock dues
 Customs duty
 Octroi
 Carriage

CCP402.8 TO 9 11
Consignor’s indirect expenses:

 Bank charges for discounting the bills

 Expenses incurred on damaged goods

Note: These expenses do not increase the

value of the goods

CCP402.8 TO 9 12
Consignee’s indirect expenses:

 Godown rent
 Godown insurance
 Salary to salesman
 Advertising charges
 Selling expenses
 Commission

Note: These expenses do not increase the

value of the goods

CCP402.8 TO 9 13
If details of expenses are not given.

 Expenses Incurred by consignor should be

included
 Expenses Incurred by consignee should be
ignored

CCP402.8 TO 9 14
Illustration:

Calculate the value of unsold stock

 Gopi of Goa sent 100 cycles costing Rs.30,000/-
to Prasad of Puna on consignment basis
Consignor spent Rs.1,500/- towards freight
Consignee spent cartage Rs.200/-, Godown rent
Rs.750/- Consignee sold 80 cycles

CCP402.8 TO 9 15
Solution:

Rs. Rs.
Cost of 100 cycles 30,000

Add : Non-recurring expenses incurred by

Consignor:
Freight 1,500
Consignee:
Cartage 200 1,700

∴ Value of 100 cycles 31,700

CCP402.8 TO 9 16
Calculation of unsold stock

Value of 100 cycles = Rs. 31,700/-

Value of 1 cycle = 31700÷100 =317/-

Value of 20 cycles unsold = 317 x 20 = 6340

CCP402.8 TO 9 17
Journal Entry in the books of
Consignor

CCP402.8 TO 9 18
For unsold stock remaining with the consignee

Stock on consignment a/c Dr. 6,340

To Consignment a/c 6,340
(Being the value of unsold stock)

CCP402.8 TO 9 19
Ledger account in the books of Consignor
Posting:

Dr. Consignment account Cr.

Date Particulars L. Amt Date Particulars L. Amt
F. Rs. F. Rs.
By stock on 6,340
consignment a/c
(value of unsold
stock)

CCP402.8 TO 9 20
Journal Entry in the books of Consignee

For unsold stock remaining with the consignee

 No Entry is passed

CCP402.8 TO 9 21
Exercise No.1

Calculate the value of closing stock

 Indu of Bombay sent 200 boxes of medicines
@ Rs.500/- to Bharathi of Bangalore on
consignment basis

 Consignor paid Rs.800 for freight, Rs.200

forwarding charges & packing charges Rs.500

 Godown rent Rs.1,000 is paid by Consignee

 Consignee sold 3/4th of the consignment @

Rs.750 CCP402.8 TO 9 22
Answer :

Value of 50 boxes unsold = Rs.25,450/-

CCP402.8 TO 9 23
Exercise No.2

 Rajiv & Co of Rajasthan consigned goods to

Teja & Co of Thanjavoor 100 radio sets @
Rs.500/-

 The Consignor paid

 Insurance Rs.500

 Freight Rs.800

CCP402.8 TO 9 24
 Exercise 2 contd.

Account sales received from Consignee

showing
 Gross sale proceeds of 80 sets @ Rs.600

 Carriage Rs.20

 Establishment expenses Rs.130

 Commission @ 15%

 Rajiv & Co received a bank draft for the balance

due
CCP402.8 TO 9 25
Exercise 2 contd.

 Pass Journal entries &

 Show necessary Ledger Accounts

 In the books of both the parties

CCP402.8 TO 9 26
Answer:

 Value of 20 radio sets unsold = Rs.10,264/-

 Profit on consignment = Rs.4,414/-

 Balance received from consignee = Rs.45,540/-

CCP402.8 TO 9 27
Exercise No.3

 Rao of Hyderabad consigned goods

 to Venkat of Vizag
 100 cases of Red Wine @ Rs.2,000/-
 The Consignor paid
 Insurance Rs.2,000/-
 Freight Rs.3,000

CCP402.8 TO 9 28
 Exercise 3 contd.

Account sales received from Consignee

showing
 Gross sale proceeds of 90 cases @ Rs.2,600/-
 Dock dues Rs.2,000/-, & Carriage Rs.500/-
 Warehousing expenses Rs.1300/-
 Advertisement Rs.500/-
 Ordinary commission @ 3% and
 Delcredre Commission @ 2%
 Consignor received bank draft for the balance due
CCP402.8 TO 9 29
Exercise 3 contd.

 Pass journal entries &

 Show necessary Ledger Accounts
 In the books of both the parties

CCP402.8 TO 9 30
 Answer:

 Value of 10 cases of goods unsold = Rs.20,750/-

 Profit on consignment = Rs.33,750/-

 Bank draft received for the balance = Rs.2,18,000/-

CCP402.8 TO 9 31
Exercise No.4

 Vasu of Vizag consigned goods to Amritha of

Ahamedabad
 250 bales @ Rs.2,000/-
 The Consignor paid carriage expenses
Rs.3,750/-
 Advance Rs.5,000/- received from Consignee

CCP402.8 TO 9 32
 Exercise 4 contd.

Account sales received from Consignee

showing
 Details of sales:

175 bales @ Rs.2,500/-

25 bales @ Rs.2,200/-

 Expenses Rs.1,000

 Commission @ 10%
 Consignor received bank draft for the balance amount

CCP402.8 TO 9 33
Exercise 4 contd.

 Pass Journal entries &

 Show necessary Ledger Accounts
 In the books of both the parties

CCP402.8 TO 9 34
Answer:

 Value of 50 bales unsold = Rs.1,00,750/-

 Profit on consignment = Rs.39,250/-

 Bank draft received for the balance = Rs.4,37,250/-

CCP402.8 TO 9 35
Summary

In this class, we discussed about

 The meaning of unsold stock

 The procedure for valuation of unsold stock

 How to pass Journal Entry for unsold stock &

its posting

CCP402.8 TO 9 36
Quiz

1. For calculation of Unsold stock, what

must be added to the cost of the goods
a. Proportionate direct expenses of
consignor
b. Proportionate direct expenses of
consignee
c. Both
d. None
CCP402.8 TO 9 37
Quiz contd.

2. Which of the following is Direct expense?

a. Freight
b. Carriage
c. Bank discounting charges
d. a & b

CCP402.8 TO 9 38
Assignment

Solve problems from your text book on unsold

stock

CCP402.8 TO 9 39