Understanding Consignment Sales

Understanding Consignment Sales
Sales consignment sales are also called surrogate, which suggests the goods (the owner) called the consignor (konsinyor) or observer, is the party receiving the deposit item is called consignee, commissioner. The terms of the sale according Harnanto Jonah Hadori are:

"Consignment is an agreement where the parties have the goods handed over a number of goods to certain parties to provide the commission with dijualkan" 3

Basically, all these consignment sales were:

- Element of the agreement

- Element owner of the goods

- Elements of goods entrusted party

- Elements of goods deposited

- Element sales

- Element commission

Ignoring one of these elements will make the transaction can not be called a consignment sale, therefore all these elements must exist at the time of consignment sales.

Accounting Treatment differences Regular Sales and Consignment Sales

Relationship Konsinyor and consignee in Consignment

Recording Method Consignment Sales

In principle, revenue is recognized when the consignment sale of goods made by the consignee consignment to a third party. If you need konsinyor sales reports or loss on the sale of goods on consignment, then the records must be held separately from regular sales transaction.

As for method of administration of merchandise, there are two alternatives, namely perpectual methods and Physic. If the consignment transactions recorded separately from other transactions, then any method used, the parties must be held account konsinyor "consignment goods". If the transaction is not recorded separately from other transactions, the delivery of goods on consignment note in the "memorandum". For each consignment agreements in the transaction accounts of goods entrusted to the consignee is basically account consignment goods which are for konsinyor supplies. Account was created as a control account for each of the consignee or a contra account for transactions made with the consignee consignment. If the account needs assistant konsinyor the maid's account held for each consignee. If the parties want konsinyor profit on sale of consignment must be determined separately, the accounts of goods on consignment for each consignee burdened cost of delivered goods to the consignee and all costs associated with the consignment. If sales have been made by the consignee of this account is credited. Profit or loss on sale of consignment bukukan eventually transferred from the estimated profit or loss on consignment to estimate the cost of income which summarizes the net result of all activities. Meanwhile, if the transaction requires konsinyor consignment must be combined with other ordinary transactions and business income is calculated price. Thus the income and expenses recorded in a consignment sale that summarizes the estimated joint business activities.

To record all transactions are recorded in verse journal, the accounting treatment for sale of consignment can be classified in:

1) Recording by a consignment which resolved completely.

If in a consignment contract has been completed at the time of the konsinyor will compile the financial statements at the end of each accounting period the recording procedure and the journal posts to be created by the delivery konsinyor goods, the sale of goods, payment of goods, and settlement finance, by the consignee to konsinyor are as follows:

a. Recording of the book deals konsinyor if konsinyor held separately from regular sales transaction.

Table 1

Recording differences in Konsinyor Books

Consignment sales transactions recorded separately

Method of Physical Perpectual and Methods

Method Perpectual


Physical Methods

1) delivery of goods on consignment

consignment goods xx

inventory of finished products xx

2) paid for shipping freight consignment goods xx

Cash xx

3) accepted sales calculations

a. recorded sales

xx receivables

xx consignment sales

b. recorded cost of goods sold on consignment HPP xx

xx consignment sales costs

consignment goods xx

4) revenue / cash remittances from consignee

Cash xx

xx receivables

5) closing / transfer of cash balances

account delivery of goods on consignment to the profit and loss


consignment goods xx

delivery of goods on consignment xx

consignment goods xx

Cash xx

xx receivables

xx consignment sales

Consignment HPP xx

xx consignment sales costs

consignment goods xx

Cash xx

xx receivables

delivery of goods on consignment xx

xx income

Source Jonah Hadori Hartanto, Advanced Financial Accounting, Edition I, First Edition, BPFE, Yogyakarta, 1981, 152 pages.

In the calculation of profit and loss statements, balance delivery consignment items deducted from the amount of goods available for sale in determining the amount of the regular cost of goods sold. Thus the journal still made even though no goods sold until the end of the fiscal year concerned.

b. Recording of the book consignee consignee if the transaction is held separately from regular travel transactions.

- Delivery of goods to the consignee. Here the consignee recorded on the consignee receipt of goods with a memorandum in his diary or in a separate book which was held for this purpose.

- Load the consignee must be defined in the consignment will dijurnal as follows:

consignment went xx

Cash xx

- The sale by the consignee, will dijurnal as follows:

Cash xx

consignment went xx

- Commission or profit that still must be accepted for the consignee will dijurnal as follows:

consignment went xx

commission on consignment sales xx

- Sending cash and consignment sales estimates by the consignee, will dijurnalkan as follows:

consignment went xx

Cash xx

c. Recording on konsinyor book. If the consignment transaction is not held separately from regular sales transactions

Table 2

Differences in recording Konsinyor Book

Sales transactions not Held Separate consignee

Method of Physical Perpectual and Methods

Method Perpectual


Physical Methods

1) delivery of goods on consignment

consignment goods xx

inventory of finished products xx

2) paid freight shipping freight xx

Cash xx

3) accepted sales calculations

a. recorded sales

xx receivables

xx sales

b. recorded cost of goods sold cost of goods sold xx

consignment goods xx

c. delete your account balance delivery of goods at the end of the fiscal year for items that have been sold

4) receiving / sending cash

Cash xx

xx receivables


consignment goods xx

delivery of goods on consignment xx

xx freight

Cash xx

xx receivables

xx sales

cost of goods sold xx

consignment goods xx

delivery of goods on consignment xx

Cash xx

xx receivables

Source Jonah Hadori Hartanto, Advanced Financial Accounting, Edition I, First Edition, BPFE, Yogyakarta, 1981, 153 pages.

Journal account balances to eliminate shipping consignment goods and accounts. Consignment items do not need to be made on physical methods, if at the time of delivery was not recorded in a journal book, but only in the form of memorandum.

d. Recording of the book consignment consignee if the transaction is not held separately from regular sales transaction.

- The delivery of goods to the consignee. Here, the consignee of goods consignment note with paragraph memorandum journals.

- Load the consignee specified on the consignment.

Party party consignee debit konsinyor estimates for the burden that must be charged to the credit konsinyor and approximate estimate of the asset or liability in question.

- Sales by the consignee.

Consignee as recorded on the consignment sale of used sales. Each verse is accompanied sales journal with a verse journal to record the load incurred by the konsinyor, for goods sold, estimated or expected purchase cost of goods sold debited and credited konsinyor party estimates.

- Commission or the profit that still must be accepted for the consignee.

Consignee party does not make a verse journal for commission or profit on sale of consignment. Revenue from sale consignee will be reflected in gross profit as a result of the consignee of the verses above journal was created.

- Delivery of cash and consignment sales estimates by the consignee.

Party consignee to the payment records with debit konsinyor estimates konsinyor and crediting the cash account.

2) Recording for the consignment is not resolved completely.

If the party should draw konsinyor financial statements at the end of each accounting period and the period of consignment agreement is still in progress or not all the goods sold on consignment by consignment, then the necessary adjustments to the items related to some unfinished products thoroughly until the end of accounting period .

The discussion is as follows:

a. Recording of the book if the transaction is a consignment konsinyor held separately from regular sales transaction.

At the end of the fiscal period booked konsinyor consignment sales reports, so that he can to record a gain or loss on the sale of goods on consignment until that date. Method of recording on consignment transactions recorded in the way in a consignment agreement that resolved completely, only the amount of sales recorded for the amount of consignment of goods sold on consignment. Recording of goods that have been issued by the consignee konsinyor or relating to the sale of goods on consignment must be allocated from each of the items have been sold or goods that have not sold.

Delivery of goods to the consignee originally recorded by debiting estimates consignment goods, at the time of the sale of the balance of goods on consignment is credited for the cost of goods sold on consignment by the consignee. This causes estimates consignment goods still contain debit balances. This debit balance states the cost of other expenses incurred on consignment goods are not sold. Approximate balance in a consignment of goods listed in the balance sheet as part of a final inventory of the company.

b. Recording of the book if the transaction does not konsinyor held separately from regular sales transaction.

If the consignment transaction records is not specified separately or combined with regular sales transaction, the parties konsinyor booked against the costs incurred in connection with the sale of the consignment into the books by debiting konsinyor estimated costs involved. However, if the consignment of goods entrusted to the consignee who has not sold, then these costs should be deferred pembebanannya. If konsinyor using perpectual method, the delivery of goods to the consignee recorded in the memorandum. When received the report from the consignee sales calculations, are treated the same as in case of a regular sales journal at the time of the post closing of the post along with the suspended journal costs associated with products not sold, by debiting the cost estimates for deferred pembebanannya cost allocation for items not sold and crediting the estimated costs that linger on products not yet sold.

Meanwhile, if using physical methods, the delivery of goods to the consignee originally recorded in the memorandum, at the time of the report received from consignment sales calculations, are treated the same as in case of regular sales. As for the costs incurred consignee who is still attached to products not sold, then the cost of a debit dijurnal goods on consignment, some still attached to the cost of products not yet sold. At the end of the period, the cost of goods sold on consignment and not transportation costs incurred konsinyor, which is still attached to products not sold will be credited and a consignment of goods to be debited, so the balance of goods on consignment to show the cost of goods on consignment and the cost -costs that linger on consignment goods are not sold.

c. Recording of the book consignee if the transaction is recorded separately and are not recorded separately from regular sales transaction.

Table 3

Differences Recording In consignee Books

If the Transaction recorded separately and

Not Logged In consignee

Transaction-Transaction


If the transaction is recorded in a separate consignment


If the consignment transaction is not recorded separately

Acceptance of goods on consignment


memo


memo

1. Cash sales


Cash ... ... ... ... ... ... .. xx

Goods commissions ... .... Xx


a) Cash ... ... ... xx

Sales ... ... xx

b) Purchase .... xx

Debt ... ... ... xx

2. Freight paid


Commission stuff ... xx

Cash ... ... ... ... ... ... ... .... Xx


Debt ... ... .. xx

Cash ... ... ... ... .. xx

4 a. Calculation of commission on the sale of goods commission

b. Delivery

and at the same time shipping calculation check sales results


a. Commission goods .... Xx

Commission income ... ... .. xx

b. Commission goods .... Xx

Cash ... ... ... ... ... ... ... ... .. xx


b. Debt ... ... xx

Cash ... ... ... ... xx

Source: Hadori Jonah and Harnanto, Advanced Financial Accounting, Edition I,

Printed First, BPFE, Yogyakarta, 1981, p. 159

The next recording process, namely the closure of the nominal accounts to the profit and loss account and balance transfers to profit or loss of profit is held as usual.

Accounting Treatment of Consignment Goods Returned and the consignee Payment

1. Consignment goods are returned

Where the goods are returned to pengamanat consignment (consignor), the accounts of goods on consignment must be credited with the cost of the goods concerned. The costs associated with activities to sell the goods (freight, packaging costs, assembly costs and return shipping costs), should be charged to the income for the period. Costs occur not be capitalized as part of basic goods are returned or not should be suspended pembebanannya, since it provides no benefits will be the future. In the case of returned goods due to damage, so the benefits are no longer worth the price point, then the decline in value must be recognized as a loss. If the repair costs needed to be able to sell these goods, the cost of repair (repair) should therefore be recognized as period costs.

2. Advances consignment

If the consignment transactions, konsinyor require an advance payment of consignment goods are shipped to the consignee, the acceptance of these advances can be dijurnal as follows:

Cash ... ... ... ... ... ... .... xx

Advances consignee ... ... ... ... ... ... ... ... xx

Advances of this consignee, should be presented as debt in the balance sheet until there is settlement of goods on consignment, then when payment dijurnal as follows:

Cash ... ... ... ... ... ... ... ... ... ... .. xx

Advances consignee ... ... ... ... xx

Receivables consignee ... ... ... ... .... ... ... Xx

Serving the influence Consignment Sales Transactions in the Financial Report for Konsinyor

These procedures should be used if you wish konsinyor serving more complete information either on consignment sales and regular sales, is to do a recording of consignment sales transactions separately from ordinary sales transactions. As for serving in the calculation of profit and loss statement can be done by:

1. Using sales data, cost of goods sold and cost of sales from consignment transactions separately from regular sales transaction.

2. Sales data, cost of goods sold and selling expenses in question are reported separately and parallel to the regular sales data. Thus be used when reporting the sale of goods on consignment is an important part of its distribution activities.

3. Presenting data in a consignment sale in the calculation of profit and loss statements, the reported profit or loss on consignment sales without sales data and presents the relevant costs, ie by adding or subtracting a consignment of income from ordinary sales gross profit.