CONSIGNMENT ACCOUNTS-II INDEX

CONSIGNMENT ACCOUNTS-II INDEX

Structure

11.0 Objectives

After studying this unit you should be able to:

• record consignment transactions directly in the ledger accounts of the consignor and the consignee
• compute the value of unsold stock
• explain the nature of normal and abnormal losses
• compute the value of unsold goods in case of normal loss
• explain the treatment of normal and abnormal losses of goods and their impact on profit.  

11.1 Introduction

In Unit 10 you learnt about the basic accounting framework relating to the goods sent on cohsignment basis i.e.  the entries to be passed in the books of consignor and the consignee. You know the method of working out the profit on each consignment when all goods are sold out. In practice you will find that at the time of submitting the Account Sales, some goods may remain unsold. Then, there is also a possibility of loss while the goods are in transit or while they are lying in the godown of the consignee. Such loss may occur due to normal or abnormal causes. In this unit you will learn how the value of unsold goods is worked out and recorded in books of account. You will also learn about the treatment of normal and abnormal losses which may take place in transit or in the godown of the consignee and their impact on valuation of stock and the profit on consignment.

11.2 Direct Recording in the Ledger

11.3 Unsold Stock 

        11 -3.1 Valuation of Unsold Stock 

        11.3.2 Accounting Treatment of Unsold Stock

11.4 Loss of Goods

        11.4.1 Normal Loss

        11.4,2 Abnormal Loss 

        11.4.3 Where Normal and Abnormal Losses Occur Simultaneously 

11.5 Let Us Sum Up

11.6 Key Words

11.7 Some Useful Books

11.8 Answers to Check Your Progress

11.9 Terminal Questions / Exercises