Determine the net income of the consignor.

A well-known consignor consigned goods costing $1,560,000 to be sold at a total advertised selling price of $3,120,000. The consignee remitted $1,422,600 to its consignor after deducting the following charges: $52,500 cartage, $22,500 installation, and a commission equal to 20% of the sales proceeds after deducting the commission. Determine the net income of the consignor.

Expert Solution

Step 1: Determine the percentage of items sold over items consigned during the period.

Remittance	1,422,600
Cartage	52,500
Installation	22,500
Net remittance after commission	1,497,600
Add commission (20%)	299,520
Proceeds from sale of goods	1,797,120
Divided by total advertised price	3,120,000
Percentage of units sold	57.60%

Step 2: Compute for the net income.

Revenue from sale	1,797,120
Cost of sales:
Purchase price (1,560,000 x 57.6%)	(898,560)
Cartage (52,500 x 57.6%)	(30,240)
Gross profit	868,320
Installation	(22,500)
Commission	(299,520)
Net income	546,300

Net income is $546,300.

Renze Joy Candido answered 3 years ago

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