Commission Agent Principal Relation: Treatment of Transactions under GST

del-credre commission and over-riding commission.

del-credre commission and over-riding commission.

Show by means of ledger accounts how these transactions would be recorded in the books of A, and find out the value of closing stock with A at which value D will account for the balance stock. ♦ when consignor is in a position to directly sale to someone there on wholesale basis at invoice price, then this calculation shows the retail profit earned by selling through consignee on retail basis. Illustration 16.12 A sends goods to B costing Rs.50,000 invoiced to show a profit of 20% on invoice price.

What are the three types of consignment?

  • Outward Consignment: When goods are sent from one country to another for sale, the consignment is called outward consignment.
  • Inward Consignment: When the goods are sold domestically for sale then it is called inward consignment.
  • X Sent some goods to Y for sale.

In that case proportionate security in respect of unsold goods is carried forward till the time the respective goods held with the consignee are sold. Nike sports Co. of New Delhi consigned 100 shoes to Adidas Co. of Ahmedabad costing _1,500 each, invoiced at_ 2,000 each. The consignor paid freight _10,000 and insurance in transit_ 1,500. Balance signifies profit or loss upon consignment and is moved to the “Profit & Loss section in Consignment Account.” As a result, the consignment profile is closed.

CPT Chapter Consignment

Suppose 10,000 kg of apples are consigned to a wholesaler, the cost being 30 per kg, plus 40,000 of freight. It is concluded that a loss of 15% is unavoidable. If the unsold inventory is 1,000 kg its value will be ` 40,000.

♦ The amount due from consignee will be inclusive of debtors if any. ♦ If we have a realistic option either to sale in bulk or in retail through consignee, in such cases we would be interested to know what is the result of appointing consignee. ♦ Similarly for developing market for new product or selling in new areas extra commission can be given.

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It is a special commission given by the consignor to the consignee. Most employers with 100 or extra staff are required to report the compensation paid to their producers by them or their insurance corporations under ERISA using Form 5500 Schedules A or C. For compensation based mostly on a producer’s block of enterprise, UnitedHealthcare reviews an quantity to every buyer in proportion to the case’s contribution to the compensation. The allocation of extra advanced bonuses is dictated by the bonus structure.

Consignment becomes handy when a person wants to expand his business at other locations as well but where neither direct sale is possible nor he wants to open a branch. Account sales is the statement sent by the consignor to the consignee. In consignment, the goods are dispatched on the basis that the goods will be sold on behalf of, at the expense of and at the risk of the consignee.

del-credre commission and over-riding commission.

The inspectors seized pictures displaying beagles having convulsions inside sealed containers. In general, fee agents buy and promote items on behalf of a principal, usually a company. These individuals work independently as contracted, third-party staff, not employees of their principals. • Firms usually like to ascertain the profit or loss on each consignment or consignments to each consignee. • Consignor does not send an invoice to the consignee. He sends only a “Proforma Invoice”, a statement that looks like an invoice but is really not one.

price. Write up the Consignment and the Abnormal Loss Accounts.?

Kale sold 20 bicycles on credit and was not able to recover sale proceeds of 5 bicycles because of insolvency of the debtor. Unlike normal practice to debiting expense accounts first and then transferring to profit and loss account, expenses are directly debited to consignment account. Companies use override commissions to encourage gross sales managers or different employees to generate sales from different representatives. Is one who has authority to act solely in a particularly designated instance or in a particularly designated set of transactions. For instance, an actual property broker is usually a special agent hired to discover a buyer for the principal’s land. Suppose Sam, the seller, appoints an agent Alberta to find a buyer for his property.

What is an example of overriding commission?

For example, you may have a sales person with a 5% commission (earns 5% of the sales value of whatever they sell). This person may have a sale manager with 6 direct reports, and may receive as his/her compensation 1% of the sales of all the people reporting to him/her. The 1% to the manager is an override.

Sri Sundaram is entitled to a commission of 10% on gross sales. Give journal entries to record the above transactions in the books of H. On 1 st February, 2006, one thousand cycles were consigned to A, each cycle costing Rs. 640 including freight and invoiced at Rs. 800.

Mehra pays freight and insurance at Kanpur amounting to Rs. 510 and draws upon Krishnan at 3 months sight for Rs. 4,500 against dispatch. ♦ Scrap value of normal lost quantity should be credited to consignment A/c. Stock should be valued at cost or net realisable value whichever is lower as per AS-2, is applicable here also. Show journal entries in the books of the consignor & consignee. Cheque/Draft received as advance or part or full paymentBank a/c Dr. ♦ It gives details of transactions entered by consignee on behalf of consignor during that period and the final balance due.

For Commerce 2023 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Why delcredere commission on consignment? Covers all topics & solutions for Commerce 2023 Exam.

Show how the transactions would appear in the books of Somesh. Miss Rakhi consigned 1,000 radio sets costing _900 each to Miss Geeta, her agent on 1st July, 2020. Miss Rakhi incurred the following expenditure on sending the consignment. Freight_ 7, Insurance _3, Miss Geeta received the delivery of 950 radio sets. An account sale dated 30th November, 2020 showed that 750 sets were sold for_ 9,00,000 and Miss Geeta incurred _10,500 for carriage.

Del-credere commission.

Reema received from Sunita an advance of 75% of the invoice price , the accounts being settled by Bank Drafts immediately on sales. Abnormal loss will be calculated at cost price only and not at invoice price. Y sold 4,000 meters at Rs. 40 per meter and incurred Rs. 2,000 for selling expenses. Y is entitled to a commission of 5% on total sale proceeds plus a further 20 per cent on any surplus price realized over Rs. 30 per meter.

  • After some time, he decreases the price of X to Rs. 10 per piece.
  • • Ownership of the goods, i.e., the property in the goods, remains with the consignor or the principal; the agent or the consignee does not become their owner even though goods are in his possession.
  • If the unsold inventory is 1,000 kg its value will be ` 40,000.
  • She incurred expenses amounting to_ 2,500 for repairing the damaged radio sets remaining in the inventories.

 Understand the special features of consignment business, meaning of the terms consignor and consignee.  Analyse the difference between the two transactions – sale and consignment and understand that why consignment is termed as special transaction.  Practice the accounting treatments for consignment transactions and events in the books of consignor and consignee.  Note the variations in accounting when goods are sent at cost and goods are sent above the cost.

However, any amount retained by the DCA on account of early payment is in the nature of supply made to the principal as business support services on which the DCA is already paying GST. Suresh was entitled to a commission of 7&1/2% on sales plus 2 & 1/2% del credere commission and 10% of any excess price realised over invoice price. Suresh was to bear all expenses incurred after the goods reached his godown. Mr. A consigned 200 cycles @ ₹ 500 each and paid ₹ 3,000 on freight. Mr. B received the remaining stock and paid ₹ 3,600 on its clearing.

A person having custody of goods in capacity of C&F agent shall maintain true and correct records in respect of goods handled by him on behalf on another person. Show the consignment to Sunita A/c and Consignee’s A/c in the books of Reema. Suresh sold 70 transistor sets at Rs. 800 each, 30 of them on credit. Out of which the proceeds of 3 transistor sets could not be recovered because of the disappearance of the customers. In transit, 10 transistor sets were damaged and Dinesh recovered Rs. 4,000 from the insurance company.

The damaged goods were sold at the rate of ` 1.50 per kg. Thus to that extent cost of good unit’s gets increased or in other words the amount of normal loss gets spread over the normal quantity. The Del Credere commission to be calculated on total sales and del-credre commission and over-riding commission. not only on credit sales unless otherwise specified. Y sold the goods for RS. 1,00,000 and he is entitled to a commission of 5% on sales. You are required to compute the value of goodwill on the basis of 3 years purchase of average profit of the business.

What is the difference between overriding commission and Del Credere commission?

Overriding commission is the extra/additional commission given over and above the normal commission. Like for taking the risk of bad and doubtful debts the del credere commission is given. For selling at higher prices, some % of extra price realized (may be selling price – invoice price) is given.

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