Consignment Account Overview
Consignment account refers to a specialized account used to record and track the sales and inventory of consigned goods. In a consignment arrangement, a consignor sends goods to a consignee to sell on the consignor’s behalf. The consignee receives a commission on goods sold. A separate consignment account is maintained for each consignment arrangement to determine the profit or loss.
Key Aspects of Consignment Arrangements
- Cost of goods supplied by consignor
- Expenses incurred by consignor and consignee
- Consignee’s sales commissions
- Sales and unsold stock
- Profit or loss on each consignment
Importance of Accurate Consignment Accounting
Maintaining accurate consignment accounts ensures transparent reporting of transactions between consignors and consignees. This protects business interests on both sides. Consignment arrangements allow sellers to access markets and minimize retailer inventory risks. The consignment account is an essential tool for tracking these arrangements.
Journal Entry for Consignment
Consignment account refers to a specialized account used to record and track the sales and inventory of consigned goods. The consignee receives a commission on goods sold. Key aspects of consignment arrangements recorded in the consignment account include: Cost of goods supplied by consignor, expenses incurred by consignor and consignee, consignee’s sales commissions, sales and unsold stock, profit or loss on each consignment.