Chapter 16 Multiple Choices

CHAPTER 16 MULTIPLE CHOICES
PROB. 16 – 1 (AICPA)
Goods on consignment should be included in the inventory of
a. The consignor should be included in the inventory of

b. The consignor but not the consignee
c. Both the consignor and consignee
d. The consignee but not the consignor
e. Neither the consignor nor the consignee
PROB. 16 – 2 (Adapted)
In accounting for sales on consignment, sales revenue and the related cost of goods sold should be
recognized by the
a. Consignor when the goods are shipped to the consignee

b. Consignee when the goods are shipped to the third party
c. Consignor when notification is received that the consignee has sold the goods
d. Consignee when cash is receiver from the customer
Consignor Co. paid the in-transit insurance premium for consignment goods shipped to Consignee Co. In
addition, Consignor advanced part of the commission that will be due when Consignee sells the goods.
Should Consignor include the in-transit insurance premium and the advanced commissions in inventory
costs?
Insurance Advanced
premium commission
a. Yes Yes
b. No No
c. Yes No
d. No Yes
Jel Co., a consignee, paid the freight costs for goods shipped from Dale Co., a consignor. These freight
costs are to be deducted from Jel’s payment to Dale when the consignment goods are sold. Until Jel sells
the goods, the freight costs should be included in Jel’s
a. Costs of goods sold

b. Freight-out costs
c. Selling Expenses
d. Accounts receivable
PROB. 16 – 5 (IFRS)
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The Oddessa Appliance Center sells goods to a third party via an agent. During 2010, Oddessa supplies the
agent with goods with a sales value of P120,000. The agent charges a commission of 15%. Under IAS 18
Revenue, how much revenue should each of Oddesse and the agent recognize in profit or loss for 2010?
Oddessa Agent
a. 170,000 22,500
b. 200,000 25,500
c. 170,000 30,000
d. 200,000 30,000
Philicor, Inc. consigned twelve refrigerators to Ocampo’s Emporium. The refrigerators cost P6,000 each
and the consignor paid p720 for freight out. The consignee subsequently rendered an account sales for
five units sold at P7,700 each, and deducted the following items from the selling price:
Commission (based on sales net commission) 10%

Marketing expense (based on commission) 10%
Delivery and Installation (on each unit sold) P30
a. How much was the net profit of the consignor on the five refrigerators sold?
a. 3,815
b. 37,780
c. 4,200
d. 3,395
b. How much was the net income remittance of the consignee on the five refrigerators sold?
a. 34,500
b. 33,780
c. 4,500
d. 4,200
PROB. 16 – 7 (Adapted)
On May 1, 2009, Holden Co. paid P5,000 for the insurance of consigned goods, while in transit, shipped to
a consignee, and P7,000 for the freigt. It addition, Holden advanced P5,000 as part of the commission that
will be due when the consignee sells the goods. The consigned goods costs Holden P50,000 and will be
sold for a total amount of P80,000. What is the total amount of inventory should Holden report for the
consigned goods on May 1, 2009?
a. 50,000
b. 62,000
c. 67,000
d. 97,000
PROB. 16 – 8 (RPCPA)
Aircon, Inc. consigned ten one-horsepower air conditioning units to Argy Trading and paid P2,000 for the
freight out. The consignee is allowed a commission of 5% on sales. Argy Trading submitted account sales
on its transactions for the month of December 2009, as follows:
Sales (6 units, including 12.5% gross profit) P72,000

Less: Advance to consignor P10,000
Selling Expenses 800
Installment and delivery 1,200
Commission 7,200 19,200
Net remittance P52,800
How much was the net profit or loss of Aircon, Inc. on the consignment?
a. 52,800 profit
b. 7,800 loss
c. 2,200 profit
d. 1,400 loss
On October 20, 2009, Grimm Co. consigned 40 freezers to Holden Co. for sale at P1,000 each and paid
P800 in transportation costs. On December 30, 2009, Holden reported the sale of 10 freezers and remitted
P8,500. The remittance was net of the agreed 15% commission. What amount should Grimm recognize as
consignment sales revenue for 2009?
a. 7,700
b. 8,500
c. 9,800
d. 10,000
December 1, 2009, Alt Department Store received 505 sweaters on consignment from Todd. Todd’s cost
for the sweaters was P80 each, and they were priced to sell at P100. Alt’s commission on consigned goods
is 10%. At December 31, 2009,, 5 sweaters remained. In its December 31, 2009 balance sheet, what
amount should Alt report as payable for consigned goods?
a. 49,000
b. 45,300
c. 45,000
d. 40,400
The following items were included in Opal Co.’s inventory account at December
31, 2009:
Merchandise out on consignment, at sales price, including

40% markup on selling price P 40,000
Goods purchased, in transit, shipped FOB shipping point 36,000
Goods held on consignment by OPAL 27,000
By what amount should Opal’s inventory account at December 31, 2009 be received?
a. 103,000
b. 67,000
c. 51,000
d. 43,000
PROB. 16 – 12 (RCCPA)
CR Manufacturing Co. consigned to CE Trading Corp. twelve (12) Sony colored TV sets which cost P9,000
each. Freight out was paid by the consignor in the amount of P600. CE Trading sold eight (8) sets, rendered
an account sales, and remitted the amount of P82,600 after deducting the following from the selling price
of the sets sold:
Commission on selling price 12%

Selling expenses P1,200
Costs of antenna given free 1,400
Delivery and installation 2,800
a. The total selling price of the eight (8) sets sold by CE Trading Corp. is:
a. 100,000.00
b. 88,000.00
c. 98,560.00
d. 78,571.43
b. The net profit of CR Manufacturing Co. on the eight (8) sets sold by CE Trading Corp. is:
a. 40.00
b. 9,332.80
c. 10,200.00
d. 10,600.00
PROB. 16 –13 (RPCPA)
Stainless Works Mfg. Co., consigned 5 dozen of stainless chairs to Urban Furniture Co. on April 1, 2009.
Each chair cost P120 and the consignor paid P600 for the shipment to the consignee. On August 15, 2009,
36 chairs were already sold and the consignee rendered an account sales, and remitted the balance due
the consignor in the amount of P5,580 after deducting the following:
Commission at 15% of the selling price

Selling expenses P360
Delivery and installment 180
a. How much is the profit on consignment?

a. 660
b. 900
c. 1,000
d. 1,260
b. the cost of the inventory on consignment in the hands of Urban Furniture Co. is:
a. 2,880
b. 3,120
c. 3,480
d. 4,320
On January 1, 2009, Pete Electrical Shop received from Marion Trading 300 pieces of bread toasters. Pete
was to sell these on consignment at 50% above cost, for a 15% commission on the selling price. After
selling 200 pieces. Pete had the remaining unsold units repaired for some electrical defects for which he
spent P2,200. Marion subsequently increased the selling price of the remaining units P330 per unit.
On January 31, 2009, Pete remitted P64,980 to Marion after deducting the 15% commission, P850 for
delivery expenses of sold units, and P2,000 for the repair of 100 units. The consigned goods cost Marion
Trading P200 per unit, and P900 had been paid to ship them to Pete Electrical Shop. All expenses in
connection with the consignment were reimbursable to the consignee.
a. The consignment profit on the units sold was:

a. 12,200
b. 12,880
c. 13,000
d. Answer not given
b. The value of inventory on consignment was:

a. 8,1120
b. 8,800
c. 8,920
d. Answer not given
In September 2009, Conanan Book Store consigned 3,200 books, costing P60 and retailing for P100 each
to Rosales Store, debiting Accounts Receivable and crediting Sales for the retail sales price. Freight cost
P3,200 was debited to Freight Expenses by the consignor. On September 30, 2009, Conanan Book Store
received from Rosales Store the amount of P142,020 in full settlement of the balance due, and Accounts
Receivable was credited for this amount. The consignor and P200 for advertising expense. How many
books were actually sold by Rosales Store?
a. 1,424
b. 1,780
c. 2,064
d. 3,200
Stone Co. had the following consignment transactions during December 2009:
Inventory shipped on consigned to Beta Co. 18,000
Freight paid by Stone 900
Inventory received on consignment from Alpha Co. 12,000
Freight paid by Alpha 500
No sales of consigned goods were made through December 31, 2009. Stones’s December 31, 2009 balance
sheet should include consigned inventory at
a. 12,000
b. 12,500
c. 18,000
d. 18,900
On November 30, 2009, Northup Co. consigned 90 freezers to Watson Co. for sale at P1,600 each and paid
P1,200 in transportation costs. A report of sales was received on December 30, 2009 from Watson
reporting the sale of 20 freezers, together with a remittance was net of the agreed 15% commission. How
much, and what month, should Northup recognize as consignment sales revenue?
November December
a. 0 32,000
b. 0 27,200
c. 144,000 0
d. 142,800 0
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CHAPTER 16 MULTIPLE CHOICES

Goods on consignment should be included in the inventory of

a. The consignor should be included in the inventory of

a. Consignor when the goods are shipped to the consignee

a. Costs of goods sold

Commission (based on sales net commission) 10%

Sales (6 units, including 12.5% gross profit) P72,000

Merchandise out on consignment, at sales price, including

Commission on selling price 12%

PROB. 16 –13 (RPCPA)

Commission at 15% of the selling price

a. How much is the profit on consignment?

a. The consignment profit on the units sold was:

b. The value of inventory on consignment was:

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