Hi people in the last video clip we have seen the intro of consignment accounts alright now in this video clip we are mosting likely to address a trouble on consignment all right below it is said that Mahesh of Mumbai consigned products of the price of rupees 20,000 to Balaram of Bangalore alright so Mahesh has actually sent items to Balaram of costing rupees 20,000 alright so Mahesh is the consignor and also balaram is the consignee all right after that it is said the consignor pays freight of Rs.1000 and insurance coverage of Rs.500 all right so Mahesh has actually sustained some costs to send out the goods to the consignee alright and also got an advance of Rs.10,000 by cheque from Balaram fine so Balaram has actually paid an advance to Mahesh of 10,000 fine alright then it is said the consignee paid carriage of Rs.300 and also octroi of the Rs.200 all right so Balaram additionally has actually incurred some costs to get the products fine then it is stated he offered all the products for Rs.30,000 Rs.30,000 and sent an account sales alright so he marketed the items he sold all the goods okay and sent an account sales Accounts sales it is a declaration including all the info of what Consignee did how much products he got okay just how much he he offered and also just how much payment he billed etc.Etc.
all appropriate fine then it is stated he likewise sent a cheque to Mahesh for the amount due after deducting his costs along with the Commission at 10 % on the gross sale profits okay so he sent out a cheque to Mahesh all the cash which he obtained that is 30,000 he sent out a cheque to Mahesh after subtracting his expenditures so all the expenses of Consignee is bear by Mahesh fine then together with the Compensation 10% that suggests consignee is getting a payment of 10% on the gross sale earnings fine ten 10% on 30,000 all right that is the sales alright after that it is stated prepare the required journal account in the publications of Mahesh the consignor all right so we'' ll prepare three accounts initial one would be Consignment a/c and the second one would certainly be the Consignee a/c account as well as the third would be Excellent sent on consignment a/c okay it is very easy okay I will certainly show you exactly how to prepare all those 3 accounts all right all right okay now we'' ll prepare all the accounts in the publications of Mahesh okay that is the consignor fine all right currently consignment account consignment account is similar to Trading & & P/L a/c alright in consignment account we videotape expenditures on debit side alright and profits revenues on debt side fine so consignment account is prepared to discover revenue or loss made by the consignment fine so in this concern initially it is said that Ramesh send out the items to Balaram fine so he needed to buy this products before sending it on consignment all right to make sure that acquisition is an expense for Mahesh all right so expense we tape-record it on the debit side of consignment account okay so here we will write this 20,000 fine 20,000 and also we will certainly compose here ''' ' To products “To items sent out on consignment” okay to excellent sent out on consignment alright next it is given here the Ramesh has actually sustained some expenses to send out the items alright like freight and insurance policy of 1,000 and 500 so this is additionally an expenditure for Mahesh fine so these expenses will additionally come on the debit side fine yet right here we will certainly compose below “” To pay”” fine we will certainly NOT contact Freight or To Insurance due to the fact that in consignment account we require to prepare restricted number of accounts all right we require to prepare restricted number of accounts so to prepare limited variety of accounts we have to take below to cash money fine and below under we will write products as well as insurance coverage all right that is 1,000 as well as 500 equal to 1500 okay following here it is said that Balaram the Consignee has also sustained some costs such as carriage of 300 and also of Otroi of 200 fine so these expenditures will also begin the the debit side all right “” To Balaram”” right here we will create as “” To Balaram”” and NOT To Cash alright because Balaram is the person who sustains those expenses fine carriage of 300 and Octroi of 200 all right equal to 500 alright currently it is said Balaram offered all the items for 30,000 30,000 fine so this is Sales so sales is it a cost or a profits of program it is an earnings alright so all the incomes will certainly begin the credit score side all right so we will create below 30,000 okay as well as below we will create “” By Balaram”” due to the fact that Balaram is the individual who marketed all the products okay sales okay currently next right here it is claimed that commission on sales that means Balaram is qualified to a compensation of 10% on sales Compensation is an expenditure for Ramesh fine since Ramesh needs to pay the Commission to Balaram so that cost will certainly come on the debit side alright and also it will come as “” To Balaram”” fine compensation it is stated Payment of 10 percent Payment on sale 30,000 okay so 10 percentage on 30,000 is equal to 3000 okay easy best okay currently we will locate and balance this account out the balancing figures fine so credit rating side is larger than debit side okay so we will certainly create this 30,000 on both sides 30,000 30,000 alright then we'' ll deduct all this with 30,000 all right as well as it will certainly provide us the balancing number that is 5000 all right “” To Revenue as well as Loss”” the earnings will be moved to benefit as well as loss account fine easy appropriate oh okay after preparing the consignment account we need to prepare The Consignee A/c alright and also this account is prepared to discover out the quantity due from the consignee fine quantity due from the consignee fine okay so to prepare this account initially you need to see the consignment account all right you need to see where the consignee name appears on the consignment account okay if it appears on the debit side then you have to attribute it in the consignee account fine and if it appears on the credit score side then you have to debit it in the consignee account alright so below Balaram has shown up right here on the debit side of consignment account so we will attribute it over here as by By Consignment alright By Consignment equivalent to 500 likewise it has actually shown up here likewise To Balaram so right here it is debited after that here it will certainly be right here we will attribute it ok By Consignment 3000 rupees all right now Balaram name has additionally appeared on the debt side of consignment account fine so we will debit it in the consignee accounts by consignment as by consignment all right By Consignment 30,000 great oh after that it is stated in the inquiry that Balaram has actually paid an advancement to Ramesh of 10,000 all right to make sure that development we will tape it on the credit report side of consignee account as “” By Bank”” all right “” By Financial institution”” 10,000 alright it is offered in the question.Okay then we will certainly balance this account as well as discover out the amount due from the consignee alright so debit side is bigger than the credit scores side fine so we ' ll compose 30,000 on both the sides alright 30,000 30,000 then we will certainly deduct all these with up 30,000 and also it is equal to 16,500 fine as well as it will certainly be the harmonizing figure and we ' ll create By Bank all right is a balancing number fine very easy best fine all right after preparing the Consignment A/c and also then the Consignee A/c we need to prepare Item Sent on Consignment A/c okay so to prepare this account you require to see the Consignment A/c alright and also see where the products sent out on consignment appears in the consignment account fine in this issue it shows up on the debit side fine so we will credit it over right here okay as “” By Consignment”” okay By Consignment 20,000 okay and also we will certainly stabilize this directly ok we'' ll equilibrium this will balance this account and also here we will create “” To Trading A/c”” okay we will certainly move this balance to trading account all right this is the balancing number easy right alright okay at initially we prepared the consignment account in the books of Mahesh okay and also this account is prepared to figure out the revenue or loss made by the consignment all right and also in this account all the expenses are videotaped on the debit side and all the revenues on the credit history side fine and we debited this also “” Item Sent on Consignment”” since this was an expense for the consignor fine and also similarly these expenses we videotaped it as “” To Money”” since in consignment we always record expenses of Consignor as “” To Cash money”” fine likewise the consignee has additionally sustained some costs so we videotaped his expenditures by his name as “” To Balaram”” all right after that we recorded his commission the compensation of Consignee “” To Balaram”” as 3,000 fine after that Balaram has actually Marketed all the items so we taped right here on the debt side since Sales is an earnings so we always document earnings on the credit rating side alright so we credited “” By Balaram”” 30,000 because balarama was the individual who sold all the products all right okay then the balanced is account and also learnt the revenue as 5000 fine very easy right all right alright after preparing the Consignment A/c we prepared the Consignee A/c okay and this account is prepared to discover the amount due from the consignment okay so to prepare this account first we saw the consignment a/c okay as well as whatever was credited over below by the name of consignee we debited it over here by the name of consignment okay and also whatever was debited over here by the name of consignee we attributed it over below by the name of consignment all right then we attributed the bank advancement the advancement that was paid from the consignee to the consignor all right and afterwards as a balance number we found out then as a balance in number we figured out as amount due as 16,500 fine very easy best okay okay after preparing The Consignment A/c and after that The Consigning A/c we prepared Product Sent on Consignment A/c all right and also this To products sent on consignment we credited it as By Consignment all right then we stabilized this account and also learnt the balancing figure as 20,000 20,00 all right and we transferred this balance to trading accounts fine simple ideal Okay.