Question

On July 2, Eagle Ltd. shipped merchandise costing $360,000 on consignment to Goldfinch Stores. Eagle paid freight costs of $10,000. Upon sale, Goldfinch will receive a 12% commission. At the end of the month, Goldfinch notifies that 50% of the merchandise has been sold for $560,000, and send Eagle the money via electronic transfer.

Prepare the journal entries for Eagle Ltd. to account for this consignment in the month of July.

Answer 1

Journal Entries in the books of Eagle Ltd.

Date	Account Name	Debit	Credit
July 2	Consignment to Goldfinch Stores A/c To Goods send on Consignment ( Being goods sent on consignment to Goldfinch Stores)	$ 360,000	$ 360,000
	Consignment to Goldfinch Stores A/c To Cash A/c ( Being freight $ 10,000 paid for sending goods to Goldfinch Stores)	$ 10,000	$ 10,000
	Goldfinch Stores A/c To Consignment to Goldfinch Stores A/c ( Being the half goods sold by Goldfinch Stores)	$ 560,000	$ 560,000
	Consignment to Goldfinch Stores A/c To  Goldfinch Stores A/c ( Being Commission charged by @ 12% on sales )	$ 67,200	$ 67,200
	Bank Account To  Goldfinch Stores A/c (Being money received via electronic transfer from Goldfinch Stores)	$ 492,800	$ 492,800
	Consignment to 360,000 A/c To Profit and loss on consignment ( Being Profit and loss on consignment transferred )	$ 307,800	$ 307,800
	Goods send on Consignment A/c To Purchase A/c ( Being the adjustment for goods sent on consignment )	$ 360,000	$ 360,000

Dr.    Consignment to Goldfinch Stores A/c Cr.

Date	Description	Amount	Date	Description	Amount
	Goods sent on consignment	$ 360,000		Goldfinch Stores ( sales )	$ 560,000
	cash	10,000		Consignment stock	185,000
	Goldfinch Stores ( commission )	67,200
	Profit and loss on consignment	$ 307,800
		$ 745,000			$ 745,000

Dr   Goldfinch Stores A/c Cr

Date	Description	Amount	Date	Description	Amount
	Consignment to Goldfinch Stores ( sales)	$ 560,000		Consignment to Goldfinch Stores ( commission )	$ 67,200
				Bank	$ 492,800
		$ 560,000			$ 560,000