Consignment is an arrangement where a consignor sends goods to a consignee to sell on their behalf. The consignor bears the costs of materials, packing, freight, and insurance. The consignee bears unloading, rent, salary, advertising, and other recurring expenses. The consignee receives a commission on sales, usually a percentage. Any net sale proceeds are remitted back to the consignor. Accounting entries are made by both parties to record the transfer of goods, expenses incurred, sales made, commissions earned, and remittances between the consignor and consignee.

1. Unit 2
Consignment

4. Consignment
Consignor Goods Consignee
(owner of the goods or producer) Consignment Agent to sell
Consignor expenses
Cost of material
Packing, Loading/ Freight
Transit insurance, Duty/Tax,
other expenses
Consignee expenses:
• Non Recurring expenses (unloading/freight/
duty/tax)
• Recurring Expenses (Rent, salary, advertisement,
insurance, other expenses)
• Commission (simple, Delcredere, Over-riding)
• sales
• Commission (simple, Delcreder, Over-riding)
Net sale proceeds to
consignor
Consignment account
Goods sent on consignment account
Consignees account
Consignor account
Commission account

17. Sr.No. In the Books of Consignor Dr Cr In the Books of Consignee Dr Cr
1 When goods are sent to the consignee
Consignment A/c Dr
To Goods Sent on Consignment A/c
(Being Goods Sent on Consignment)
Xx
xx
No need to do any Entry in this case
2 Expenses Incurred by Consignor
Consignment A/cDr
To Cash/Bank A/c
(Being Expenses incurred on consignment)
Xx
xx
Not Applicable
3 Advance given by consignee
Cash/Bank A/cDr
To Consignee’s A/c
(Being advance received from consignee)
Xx
xx
Consigner A/cDr
To Bank/Cash A/c
(Being Advance amount paid to Consignor)
Xx
xx
4 Expenses Incurred by Consignee
Consignment A/cDr
To Consignee’s A/c
(Being Expenses incurred by consignee)
Xx
xx
Consigner A/cDr
To Bank/Cash A/c
(Being Expenses incurred on goods received on
consignment)
Xx
xx
5 Sale by Consignee
Consignee’s A/cDr
To Consignment A/c
(Being Expenses incurred by consignee)
Xx
xx
Cash (for cash sale) A/cDr
Debtors (for Credit Sale) A/c Dr
To Consignor A/c
(Being goods sold)
Xx
xx
6 Commission to Consignee
Consignment A/cDr
To Consignee’s A/c
(Being Commission on sale due to consignee)
Xx
xx
Consigner A/cDr
To Commission A/c
(Being Commission earned)
Xx
xx
7 Remittance from Consignee
Cash/Bank A/cDr
To Consignee’s A/c
(Being due amount received from consignee)
Xx
xx
Consigner A/cDr
To Bank/Cash A/c
(Being Balance due Payment made to consignor)
Xx
xx
8 Entry for Profit on Consignment
Profit & Loss A/cDr
To Consignment A/c
(Being Profit earned on consignment)
Xx
xx
Not Applicable
9 Loss on Consignment
Consignment A/cDr
To Profit & Loss A/c
(Being Loss incurred on Consignment transferred to the profit & Loss
Account)
Xx
xx Not Applicable

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