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Account Sales:

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Learning objectives of this article:
  1. Define and explain account sales.
  2. How is it prepared?

Definition and Explanation:

In consignment sales, the goods are sent to an agent in another location in the same country or abroad for the purpose of selling them at a profit. After selling whole or a part of the goods, the consignee sends an account sales to the consignor.

Account sales is a report or statement that shows the price at which the goods are sold, expenses incurred by the consignee on behalf of the consignor, consignee's commission and the net balance for which the consignee is liable.

Specimen/Format/Example of Account Sales:

Account Sales

Consignment of 500 washing machines sold on behalf of X & Co. by Y & Co.

  $ $
Sold (500 Machines at the rate of $200 per machine: 500 × 200)   100,000
Less Expenses and Commission:    
        Duty and taxes 2,000  
        Godown rent 1,000  
        Insurance of godown 5,00  
        Commission 5% of sales 5,000 8,500
 

    91,500
Less advance   20,000
   
Balance due and bank draft enclosed   71,500
   
     
Signature:    
Y & Co.    

Note:

Sometimes consignee remits and amount to the consignor as advance. This amount is deducted by the consignee from the sales proceeds of the goods.

The consignor gets necessary information regarding the gross sales proceeds, expenses paid by the consignee and the commission of the consignee from this statement i.e., account sales. Consignor then records this information in his books of accounts.

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More study material from this topic:

Account Sales
Difference between consignment and sales
Journal entries in the books of consignor
Valuation of closing/unsold stock in consignment business
Invoicing goods at a price higher than cost price




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