Local Media3437305617881796650
Local Media3437305617881796650
Local Media3437305617881796650
1. Cavite Town Center consigned 12 washing machines to Laguna Emporium. Each washing
machine costs P6,000 and the consignor paid P720 for the freight. The consignee 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 of commission 10%
Marketing expense (based on commission) 10%
Delivery and installation per unit sold P30
2. Grid Works Co. consigned 5 dozens of stainless chairs to Contemporary Furniture Co. on April
1 of the current year. Each chair costs P120 and the consignor paid P600 for the shipment to the
consignee. On August 15, 36 chairs were already sold and Contemporary rendered an account
sales and remitted the balance due to the consignor in the amount of P5,580 after deducting
the following expenses: Commission (15% on sales)
Selling expenses P360
Delivery expenses 180
Freight of 12 defective chairs returned 255
3. Cavite Town Center consigned 12 washing machines to Laguna Emporium. Each washing
machine costs P6,000 and the consignor paid P720 for the freight. Subsequently, the consignee
returned one defective unit and 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 of commission 10%
Marketing expense (based on commission) 10%
Delivery and installation per unit sold P30
The remittance of the consignee on the five washing machines sold is 34500
4. The CCM Corporation ships out Laser Discs and television sets to consignees, who are allowed
commission of 15% of the selling price on both types of merchandise. Consignees are also to be
reimbursed for expenses incurred in connection with the consignment shipments. On December 31, the
following information pertain to the consigned goods:
Cost of goods shipped to consignees:
Laser disc sets @ P12,000 180,000
TV sets @ P90,000 216,000
Freight, handling and related expenses of the shipments:
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ENABLING ASSESSMENT
Consignee's remittances:
On total laser disc sets sold (net of commissions, P32,400 and cartage in, P1,800) 181,800
On 15 TV sets sold (net of commissions and installation costs of P2,700) 173,250
Costs of TV sets returned by Consignee because of defects 27,000
The account sales rendered by the consignees were accompanied by checks for correct amounts.
The total inventoriable costs related to the goods still in the possession of the consignees is
5. Ted Suavillo is an artist who sells his work under consignment. Recently, he transferred a painting on
consignment to a local shop.
Suavillo most likely should recognized revenue when the local shop sells the painting. TRUE
6. On August 31, 2021, CTC Company consigned to Lovely Company ten ladies handbags which cost CTC
P300 each. CTC paid freight charge of P150 on the shipment. On September 30, 2021, Lovely Company
submitted an account sales reporting that it sold for cash seven handbags for which it remitted P3,165
representing the net proceeds after deductions as follows:
Commission of the selling price 20% of the selling price
Advertising places upon receipt of shipment P120
Delivery of units sold 75
7. On December 1, 2020, CCN Corporation consigned 500 video players costing P600 per unit and
retailing for P1,000 per unit to CCO Store. Freight cost of P5,500 were paid by the consignor. On
December 20 CCN Corp. sent a mechanic to CCO Store to install safety devices on 200 players which have
not been sold. The costs of this alteration were parts from inventories P6,000, cash expenditure for
labor, P4,000 CCN Corp, Thereafter, increased the unit retail price to P1,100 for the remaining 200
players. On December 31, the CCO Store remitted P364,500 to CCN Corp. in full settlement to date after
deducting a commission of 10% of selling price on each player sold and P4,500 for delivering the players
sold.
8. CCB Industries sells merchandise on a consignment basis to dealers. Shipping costs are chargeable to
CCB, although in some cases the dealer pays them. The selling price of the merchandise averages 25%
above cost of merchandise exclusive of freight. The dealer is paid of 10% commission on sales price for
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ENABLING ASSESSMENT
all sales made. All dealer sales are made on a cash basis. The following consignment sales activities
occurred during 2020
9. The following information relate to the consigned goods of Papi Co. to Mami Co.:
Merchandise shipped (10 units) P10,000
Shipping cost on the transfer of goods from Papi to Mami 400
Sales (6 units) 12,000
Returns (2 units) 2,000
Charges of consignee:
Freight in 500
20% commission 2,400
Advertising 1,000
Freight for returns 200
10. Prime Co. enters into an agreement with Smile Co. whereby Prime undertakes to manufacture a
product for smile co. Prime shall be held liable for the quality of the manufactured product and its
conformance with the customer’s specified design. However, prime does not have the expertise in
manufacturing the product so it enters into a contract with Sully Co. Sully Co. shall do the manufacturing
in accordance with the specifications of the customer.
If only a portion of the manufacturing process is outsourced from Sully Co., Prime is acting not as a
consignor but as an agent. FALSE
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ENABLING ASSESSMENT
12. Revenue is recognized by the consignor when it receives an account sales from the consignee. TRUE
13. On January 1, 2021, Best Electrical Shop received from Marion Trading 300 pieces of bread toaster.
Best was to sell this on consignment at 50% above cost price and will receive a 15% commission. Best
paid P2,000 for cartage. Marion Trading consequently increased the selling price of the remaining units
to P330 after Best sold 200 units. On January 31, Best remitted P64,980 after deducting the commission ,
P850 delivery expense and P2,000 cartage. The consigned goods cost Marion P200 per unit and P1,150
was paid in shipping the goods to Best. Consignment expenses are reimbursable.
14. In accounting for sales on consignment, sales revenue and the related cost of goods sold should be
recognized by the consignee when the goods are shipped to the third party. FALSE
16. Under a consignment arrangement, the consignor recognizes revenue equal to the gross amount of
the consideration in the contract. TRUE
17. 3. On October 1, 2021, the Big Heart Company consigned one hundred wall clocks to Double S
Retailers, Inc. Each wall clock had a cost of P150. Freight in the shipments was paid by Big Heart
Company for P200. On December 1, 2021, Double S submitted an account sales stating that it had sold
sixty pieces and it was remitting the P12,840 balance due. The remittance was net of the following
deductions from the sales price of the wall clocks sold:
Commission (20% of sales price)
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ENABLING ASSESSMENT
Advertising P500
Delivery and installations charges 100
18. On May 1, 2021, Subic Co. paid P5,000 for the insurance of consigned goods shipped to a consignee,
and paid P7,000 for the freight. Additionally, Subic advanced P5,000 as part of the commission that will
be due when the consignee sells the goods. The consigned goods costs Subic P50,000 and will be sold at
60% above cost. All goods were sold by the consignee at the end of the month. Remittance was made
net of 10% commission on sales.
19. The Printex Manufacturing Company delivered 10 printers to Primeprint Company on consignment.
These printers cost P3,000 each and to be sold at P5,000 each. The Printex Manufacturing Company paid
shipment cost of P2,500. Primeprint Company submitted an account sales stating that it had returned
one unit and was remitting P21,900. This amount represents the total amount due to Printex
Manufacturing Company after deducting the following from the selling price of the printers sold:
Commission 20% of selling price
Advertising P1,000
Delivery and installation 600
Cartage on consigned goods 500
20. Goods out on consignment are properly included in the consignee’s inventory. FALSE
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