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Question
To record credit sale, when del-credere commission is given which of the following entry is passed in the books of Consignee?
A. Consignment Debtors A/c
To Consignor A/c
Dr. B. Consignor A/c
To Sales A/c
Dr. C. Sales A/c
To Consignment Debtors A/c
Dr. D. No entry is required to be passed.
To record credit sale, when del-credere commission is given which of the following entry is passed in the books of Consignee?
| A. Consignment Debtors A/c To Consignor A/c | Dr. |
| B. Consignor A/c To Sales A/c | Dr. |
| C. Sales A/c To Consignment Debtors A/c | Dr. |
| D. No entry is required to be passed. |
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Solution
The correct option is D A
When the del credere commission is allowed to the consignee by the consignor, it means that the consignee is responsible for the bad debts that may arise. So, in such a case, an entry is passed in the books of consignee which is similar to an entry that is passed for recording credit sale in the normal course of business. So, in the books of consignee, the consignment debtors account is debited and the consignor's account is credited as it is the consignor who is bound to receive the proceeds form the sale. Thus, the entry will be:Consignment Debtors A/c. Dr. To Consignor's A/c
When the del credere commission is allowed to the consignee by the consignor, it means that the consignee is responsible for the bad debts that may arise. So, in such a case, an entry is passed in the books of consignee which is similar to an entry that is passed for recording credit sale in the normal course of business. So, in the books of consignee, the consignment debtors account is debited and the consignor's account is credited as it is the consignor who is bound to receive the proceeds form the sale. Thus, the entry will be:
Consignment Debtors A/c. Dr.
To Consignor's A/c
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