Consignment

Sugam SM

Invoice price is that whenever goods are sent on consignment the consignor add some portion of notional profit which is not a real profit and send it to consignee. Why is to so? Bcz consignee shouldn't get to know what is the real profit of consignor. Treatment. We send on invoice price and as on when the invoice price on whole Consignment is credited to Consignment account and invoice price is debited to Consignment account and as of net basis it will be same as cost of goods. Eg; 100 rs cost 20% invoice price so that is 120 credit 120 to Consignment account and debit 20 to Consignment account the net treatment is 100 itself. Then if goods is left out say then portion of such invoice price is again transferred to inventory reserve account which will appear on debit side of consignment account. First of all inventory is valued at invoice price itself then to reverse impact of loading we transfer to inventory reserve. Abnormal loss obviously you will account on invoice price if it is sent by loading. Treatment of consignment account is same as of trading account

Thread Starter

In this example 120 will be debited in consignment ac and not credited

Thread Starter

I think so!

Sugam SM

Yeah sorry my bad. It is consignment a/c Dr to goods sent on consignment.