question archive Allapacan Company had the following consignment transactions during 2005: Inventory shipped on consignment to Benguet Company, consignee P600,000 Freight paid by Allapacan 50,000 Inventory received on consignment from Ifugao, consignor 800,000 Freight paid by Ifugao 50,000 No sales of consigned goods were made through December 31, 2005
Allapacan Company had the following consignment transactions during 2005: Inventory shipped on consignment to Benguet Company, consignee P600,000 Freight paid by Allapacan 50,000 Inventory received on consignment from Ifugao, consignor 800,000 Freight paid by Ifugao 50,000 No sales of consigned goods were made through December 31, 2005
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Allapacan Company had the following consignment transactions during 2005:
Inventory shipped on consignment to Benguet Company, consignee P600,000
Freight paid by Allapacan 50,000
Inventory received on consignment from Ifugao, consignor 800,000
Freight paid by Ifugao 50,000
No sales of consigned goods were made through December 31, 2005. In its December 31, 2005 balance sheet, Allapacan should include consigned inventory of?
The answer is 650,000 how was this solved?
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Answer:
Yes the correct answer is 650,000.
600,000+50,000=650,000
Only the inventory shipped on consignment to Benguet Company should be included in the consigned inventory of Allapacan.
The inventory received from Ifugao Company is owned by Ifugao Company and not by Allapacan.
Freights are included because it becomes part of the cost of the inventory.
Consignment doesn't mean the other person bought your products. It is like letting that person sell your product for a gain. If he/she wasn't able to sell it, he/she can return it back to you. You still own the it.
If another person consigned his/her products to you, you don't own it. You are just gonna sell the product for a gain. You can return it if you wont be able to sell it.
Note that when a person buys from you, you don't own anymore the product. Same goes when you buy a product, you get to own it.
If ever the consigned was able to sold your product, that 650,000 won't be part of your inventory anymore.
Consignee is the receiver, not the owner.
Consignor is the owner.
