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Zorluk: KolayPreparation of Consignment and Consignee Accounts in Consignor's Books

Bello consigned goods to Segun and paid him a del-credere commission in addition to his ordinary commission. If a credit customer defaults on payment to Segun, how should the resulting bad debt be recorded in Bello's ledger?

  1. It is not recorded in any account in Bello's ledger.Cevap
  2. B
    Debited to the Consignment Account
  3. C
    Debited to Segun's Personal Account
  4. D
    Debited to the Trading Account as part of cost of goods sold

Cevap

No entry is recorded in Bello's ledger because the consignee bears all bad debt losses when del-credere commission is paid.
When a consignor pays a del-credere commission, the consignee guarantees payment for all credit sales and personally absorbs any bad debts. Consequently, credit losses are not recognized in the consignor's books, meaning no entry is made in the consignor's ledger.

Adım Adım Çözüm

1
Identify the relationship between consignor, consignee, and del-credere commission.
The consignee (Segun) receives del-credere commission specifically to guarantee collection from credit buyers.
Del-credere commission transfers the financial risk of credit customer defaults from the consignor to the consignee.
2
Determine the accounting treatment in the consignor's (Bello's) ledger.
Since the loss is absorbed entirely by Segun out of his commission, Bello suffers no bad debt loss.
No entry for bad debts is required in either the Consignment Account or Segun's Personal Account in Bello's books.

Anahtar Kavram

Accounting treatment of bad debts when del-credere commission is paid
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Preparation of Consignment and Consignee Accounts in Consignor's Books

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