Lesson Notes By Weeks and Term - Senior Secondary School 2











  • Definition  
  • Accounting Entries     
  • Practical illustration 



Consignment of good means the sending of goods by a supplier to his agent to receive, store and sell them on behalf of the supplier after which the proceeds, having deducted all expenses incurred, will be remitted to supplier. The sender of the goods is called consignor while the agent to whom the goods are sent is called consignee.



In the  Books of the consignor you will open  

(a)     Consignment account

  1. Debits all expenses relating to goods consigned 
  2. Credits all revenue relating to goods consigned 


(b) Goods sent on consignment account

  1. Debit trading a/c with the value of goods consigned 
  2. Credit consignment account


(c)     Bank account (Extracts) 

  1. Debit proceed from consignee (agent) after deducting all expenses incurred. 
  2. Credit all expenses incurred by the consignor. 


(d)     Consignee account i. Debit sales account 

  1. Credit all expenses incurred in respect of sales 



  1. Define the term consignment of goods 
  2. Explain a. Consignor b. Consignee


Practical Illustration

On January 1, 1995, Pfizer Product Plc consigned 10 cartons of visine eye drop to Standard Pharmacy at N150 per carton. In the course he paid N400 for freight charges, N140 for insurance, and N850 for advertisement. On receiving the goods on January 5 Standard Pharmacy incurred the following expenses. Storage N100, wages N380, selling expenses N120. By January 24, Standard Pharmacy had sold all the articles and realized a total sum N21,500 in the following analysis is sales by cash N20,000, Credit sales to Kunle N1,500. The agreed commission was 3% and del-credere commission was 2% of the total sales. Required 

  1. Prepare the account submitted by consignee on 31/1/95
  2. Prepare all necessary account to record the transaction in the books of the consignor.


  1. Account sales submitted by Standard Pharmacy

                        N            N

    Sales                                21,500

    Less: Storage            100

        Wages             380

        Selling expenses         120 

Commission: General (0.03 x 21,500)    645

    ‘’    Del-credere (0.02 x 21,500) 430        (1,675)

    Sight draft enclosed                    19,825 

  1. In the books of Pfizer Product Plc. (consignor)

Good sent on consignment account

        Trading a/c (N1,500 x 10) 15,000        consignment    15,000

Consignment Account

Goods sent on consignment  15,000    standard pharmacy         21,500

Bank: freight cheque               400

    Advertisement              850

    Insurance                   140 

Standard Pharmacy 

Storage                      100

Wages                      380

Selling expenses                   120 

Commission: General               645

Del-credere commission               430

P&L a/c (profit)               3,435

                    21,500                        21,500

Bank account (Extracts)

Standard Pharmacy     19,825        Consignment       N

                            Freight charges    400

                            Advertisement    850

                            Insurance        140


Standard Pharmacy account (consignee)

Consignment: sales     21,500        Consignment           N

                            Storage             100

                            Wages            380

                            Selling expense        120

                            Comm. General        645

                            Del-credere             430

                            Bank            19,825

                21,500                    21,500  



  1. List the accounts that are opened to record consignment of goods.
  2. Explain the treatment of consignment outwards in the balance sheet.



Simplified Bookkeeping and A/C, Femi Olatunji 260 -265 



  1. The person that sends goods to another person for the purpose of selling it is (a) collector (b) consignor  (c) consignee (d) none of the above 
  2. The person who received the goods on behalf of another is (a) consignor (b) collector (c) consignee (d) none of the above 
  3. Consignment of goods means (a) receiving of goods (b) producing of goods (c) sending of goods (d) all of the above 
  4. In Goods sent on consignment account, consignment is (a) Debited (b) credited (c) all of the above (d) none of the above 
  5. In consignment account, advertisement is (a) revenue (b) expenses (c) income (d) none of the above.



On February 1, 1997 Fadeke Stores consigned 100 cases of electric clippers to her agent Bimbo, at N3,000 per case sundry expenses N420. Bimbo expenses are: warehousing N20 Railways charges N150, selling expenses N50. On April, Bimbo sold the whole consignment for N380,000 and all receipt were taken in cash. Commission Bimbo 3% plus  a delcredere commission to of 1% on sales. On 13th April Bimbo prepared his account sales which, together with bank draft for-remittance, was sent to Fadeke. Required to prepare.

  1. The account sales sent by Bimbo
  2. The necessary ledger accounts in the books of consignor (Fadeke)



  1. What are books of prime entry
  2. List any seven books of prime entry
  3. Explain the following concepts (a) business entity (b) going – concern
  4. What is a ledger
  5. List and explain three classification of ledger accounts

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