CONSIGNMENT ACCOUNTS

ILLUSTRATION 11

Bell House company Ltd sent 2,000 cases of medicine to Dashi Ltd of Dar-es Salaam at sh. 2,000 per
case. Expenses on the consignment incurred by the consignor amounted to sh. 300,000. Dashi ltd were
working as del credere agents. Their ordinary commission was 6% and del Credere commission 8%.
Dashi ltd paid sh. 400,000 immediately on receipt of the consignment.

After six months, an “accounts sales “was received by Bell House from Dashi Ltd. Giving the following
information:

(i) Sale proceeds of 1,800 cases sh. 6,000,000.

(ii) Stock of unsold goods in hand 200 cases.
(iii) Commission charged at agreed rates of 6% and 8% del Credere
(iv) Consignee’s expenses amount to sh. 500,000
(v) A bill of exchange was sent by Dashi ltd. Along with the account sales. This bill was
discounted immediately by Bell House Ltd at 10%

Assuming that Bell house ltd have to close their books on the receipt of above account sale, show the
following entries:-

(a) Ledger accounts in the books of Bell House Ltd.

(b) Consignor’s account in the books of Dashi Ltd.

Solution

BOOKS OF BELL HOUSE COMPANY LTD

Dr. Consignment Account Cr.

Ksh.’000’ Ksh.’000’
Goods sent on consignment 4,000 Consignee’s Account;
Bank Account; Sales 6,000
Expenses 300
Stock account (200 cases) 480
200/2000 x(2000 x 2,000) +
200/2000 x(300 +500)
Deshi ltd:
Expenses 500
Commission (6%x 6,000) 360
Del Cledere commission (8%x 480
6,000)
Discount on Bills received 426
(10% x 4,260)

Net profit 414

6,480 6,480
 Bills Receivable Account

Dr. Cr.

Ksh.’000’ Ksh.’000’
Consignee Account 4,260 Bank Account 3,834
Consignee Account: 426
Bank charges
4,260 4,260

Goods sent on Consignment Account

Ksh.’000’ Ks.’000’
Purchases Account 4,000 Consignment 4,000
Account

Consignment Stock Account

Ksh.’000’ Ksh.’000’
Consignment 480 Bal. c/d 480
Account 200 cases

Consignee’s Account

Dr. Cr.

Ksh.’000’ Ksh.’000’
Consignment Account Bank Account
Sales 6,000 Advance received 400
Expenses 500
Commission 360
Del cledere 480
commission
Bill receivable Account 4,260
6,000 6,000
BOOKS OF DASHI COMPANY LTD

CONSIGNOR’S ACCOUNT

Dr. Cr.

Ksh.’000’ Ksh.’000’
Bank Account Debtor’s Account 6,000
Advance paid 400
Expenses 500
Commission 360
Del cledere 480
commission
Bill payable Account 4,260
6,000 6,000

Question for practice

On 1st September 2022, Delta company Ltd sent 5,000 cases of products to Kaka Ltd of Belgium at sh.
3,000 per case. Expenses on the consignment incurred by the consignor amounted to sh. 600,000 for
freight, sh. 400,000 for customs duty sh. 200,000 for insurance in transit. Kaka ltd were working as del
credere agents. Their ordinary commission was 7% and del Credere commission 10%. Kaka ltd paid sh.
800,000 immediately on receipt of the consignment. Kaka Ltd paid sh. 300,000 in delivery of goods from
port to their premises

After four months, an “accounts sales “was received by Delta from kaka Ltd. Giving the following
information:

(i) Sale proceeds of 4,500 cases sh. 25,000,000.

(ii) Stock of unsold goods in hand 500 cases.
(iii) Commission charged at agreed rates of 7% and 10% del Credere
(iv) Consignee’s expenses amount to sh. 300,000
(v) A bill of exchange was sent by Kaka Ltd. Along with the account sales. This bill was
discounted immediately by Delta Ltd at 10%
(vi) Delta ltd have to close their books on 31st December 2022,
Required
Show the following entries: - (i) Ledger accounts in the books of Delta Ltd.
(ii) Consignor’s account in the books of Kaka Ltd.

SOLUTION

Books of consignor- Delta Ltd

Dr. Consignment Account Cr.

Ksh.’000’ Ksh.’000’
Goods sent on consignment 15,000 Consignee’s Account
Bank Account; Sales 25,000
Expenses- Freight 600
- Customs duty 400 Stock account (500 cases)
500/5000 x(5000 x 3,000) +
500/5000 x(600
+400+200+300) 1,650
- Insurance in 200
transit
Kaka ltd:
Delivery expenses 300
Commission (7%x 25,000) 1,750
Del Cledere commission 2,500
(10%x 25,000)
Discount on Bills received 1,965
(10% x19,650,000 )

Net profit 3,935

26,650 26,650

Kaka Co Ltd
Consignee’s Account

Dr. Cr.

Ksh.’000’ Ksh.’000’
Consignment Account Bank Account
Sales 25,000 Advance received 800
Expenses 300
Commission 1,750
Del credere 2,500
commission
Bill receivable Account 19,650
25,000 6,000

Bills Receivable Account

Dr. Cr.

Ksh.’000’ Ksh.’000’
Consignee Account 19,650 Bank Account 17,685
Consignee Account: 1,965
Bank charges
19,650 19,650
 Goods sent on Consignment Account

Ksh.’000’ Ks.’000’
Purchases Account 15,000 Consignment 15,000
Account

Consignment Stock Account

Ksh.’000’ Ksh.’000’
Consignment Account 200 cases 1,650

Books of consignees

Delta Co Ltd

CONSIGNOR’S ACCOUNT

Dr. Cr.

Ksh.’000’ Ksh.’000’
Bank Account Debtor’s Account 25,000
Advance paid 800
Expenses 300
Commission 1,750
Del credere 2,500
commission
Bill payable Account 19,650
25,000 25,000