COnsignment Flashcards
Tiden sold goods on consignment to several boutiques. How to treat the Ending Inventory.
Consigned goods belong to the Consignor that is Tiden. Through the whole process, which includes counting any unsold items in its ending inventory. The consignee the boutiques is paid a commission or fees like advertisement reimbursement for any sales.
Spencer Co. shipped inventory on consignment to Adam Inc. that cost $100,000. Adam paid $1,000 for advertising that Spencer reimbursed. By the end of the year Adam had sold 50% of the inventory for $90,000. The agreement stated that Adam would be paid 30% commission on all sales. What is the ending inventory amount Spencer will list on their balance sheet at year end?
commission and Ad reimbursed to the consignee is irrelevant in calculation of EI in case of consignment. As spenzer - consignor is still the owner as commission and advertising doesnt affect the inventory value.
The pertinent facts of this problem are that the inventory cost $100,000 and that 50% of it has been sold for an ending inventory value of $50,000.
