Explain me the Consignment sale concept. What are the accounting entries are required to be passed when goods exported are still in transit at the year end.
30 November 2007
Consignment sale is not exactly a sale transaction in the first transation. Goods are sent to the consginment agent and no entry is passed for that transfer. Consignment Agent is agent of the company and for all purpose that is company. When Consginment Agent sells the goods, an entry is passed in the books of the company for sale of goods. Till the goods are not sold by Consignment agent, the goods are part of the stock of the company.
Whether the goods are exported or sent locally, it depends on the terms of the contract for sale. If the goods are sold ex-factory or ex-shop then whether the goods have reached the destination or not is immaterial. CIF and FOB are terms of delivery for the purpose of billing only. NORMALLY, as soons as the goods are loaded on a ship or aircraft the sale is treated as complete.
CAclubindia
