Jansen Corporation shipped $20,000 of merchandise on consignment to Gooch Compan

Question

Jansen Corporation shipped $20,000 of merchandise on consignment to Gooch Company. Jansen paid freight costs of $2,000. Gooch Company paid $500 for local advertising, which is reimbursable from Jansen. By year-end, 60% of the merchandise had been sold for $21,500. Gooch notified Jansen, retained a 10% commission, and remitted the cash due to Jansen. Prepare Jansen’s entry when the cash is received. (Round answers to 0 decimal places, e.g. 1,525. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit (To record the cash remitted to Jansen.) (To record the cost of inventory sold on consignment.)

Explanation / Answer

Account Titles and Explanation

Debit

Credit

Cash

18,850

Advertising expense

500

Commission expense

2,150

Revenue from consignment sale

21,500

Cash received is =[ $21,500 – $500 – ($21,500 X 10%)]

(To record the cash remitted to Jansen.)

Cost of goods sold

13200

Inventory on consignment

13200

[60% X ($20,000 + $2,000)]

(To record the cost of inventory sold on consignment.)

Account Titles and Explanation

Debit

Credit

Cash

18,850

Advertising expense

500

Commission expense

2,150

Revenue from consignment sale

21,500

Cash received is =[ $21,500 – $500 – ($21,500 X 10%)]

(To record the cash remitted to Jansen.)

Cost of goods sold

13200

Inventory on consignment

13200

[60% X ($20,000 + $2,000)]

(To record the cost of inventory sold on consignment.)

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