A consignment account is prepared by the consignor of goods sent to be consignee. All transactions such as cost of goods supplied, expenses incurred by consignor or consignee, consignee’s commission, sales unsold stock, profit or loss on consignment are to be recorded through this account. This account presents a summary of the transactions that have taken place consignor and the consignee. The consignment account reveals profit or loss on consignment and is thus a mini trading and profit and loss account. Consignment account is a nominal account. Therefore, the following items are debited to this account:-
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- Cost of goods sent on consignment;
- Expenses incurred by the consignor;
- Expenses incurred by the Consignee;
- Consignee’s Commission;
- Bad debts when Del Credere Commission is not paid, and
- Profit on Consignment,
The following items are credited to the consignment account:
- Sales proceeds,
- Returns of goods by consignee,
- Abnormal loss of goods,
- Unsold stock with the consignee; and
- Loss on consignment (if any)