How to make a Consignment Sales entry?
The Principal (Consignor) sends the goods to the Consignment Agent (Consignee) to sell the goods on Consignment basis.
The Agent creates the items at ZERO Cost and receives goods under a Receipt Note Voucher without any Tracking Number.
On making a sale, the Consignment Agent prepares a Delivery Note without Tracking Number to indicate delivery of goods to the end customer. The Consignment Agent informs the Consignor to raise a Sale Bill to the customer.
This transaction does not show the value of the goods in the Consignment Agent's stock, but provides the information on the stock movement.
Finally the Consignment Agent raises a Debit Note/Invoice on the Consignor (Principal) for commission or services rendered.
Sample entries made in Consignor’s and Consignee’s books of accounts:
In Consignor’s Books of Accounts
Bank Account Dr. 10000
To Consignee Account 10000
(Being Advance received from Consignee)
Sales Order and Delivery Note entries
Commission Payable Account Dr. 500
To Consignee Account 500
(Being Credit Note or Journal to book the expenses)
Consignee Account Dr. 500
To Bank Account 500
(Being Commission paid to Consignee based on Sales)
In Consignee’s Books of Accounts
Consignor Account Dr. 10000
To Bank Account 10000
(Being Advance paid to Consignor)
Purchase Order & Receipt Note entries
Cash or Party’s Account Dr. 8000
To Consignment Sales Account 8000
(Being Sale of goods)
Consignor Account Dr. 500
To Commission Receivable Account 500
(Being Debit Note raised for receiving the commission)
Bank Account Dr. 500
To Consignor Account 500
(Being Commission received)