\"A relatively small number of machines have been shipped on consignment. These
ID: 2447531 • Letter: #
Question
"A relatively small number of machines have been shipped on consignment. These transactions have been recorded as ordinary sales and billed as such. On December 31 of each years, machines were billed and in the hands of consignees amounted to:
2011 $6,500
2012 None
2013 $5,590
Assume that the gross profit rate is 20% and the inventory at the end of each year included the machines which were at on consignment at December 31."
What would the adjusting entries be for BOTH the books are still open at the end of 2013 AND the books have been closed at the end of 2013?
Explanation / Answer
When Books are not Closed at 31 Dec,13 31-Dec Sales(Ordinary Sales) 5590 To Consignment Account 5590 31-Dec Consignment Account 4658.33 To Inventory 4658.33 31-Dec Consignee Account 5590 To Accounts Receivable 5590 When Books are Closed at 31 Dec,13 31-Dec Sales(Ordinary Sales) 5590 To Consignment Account 5590 31-Dec Consignment Account 4472 To Inventory 4472 31-Dec Consignee Account 5590 To Accounts Receivable 5590 31-Dec Consignment Account 1118 To Income Statement 1118 (Profit on Consignment Taken in to Income Statement)
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