Question

Cullumber Manufacturing Inc. is a local manufacturing company. Rather than sell its product directly. Cullumber ships its finished goods inventory to CMR Retailing Ltd., who sells the product for Cullumber on consignment. During 2020, Cullumber ships $101,500 in merchandise to CMR. At the end of 2020, CMR has sold 65% of the merchandise for $73,500. CMR notifies Cullumber of the sales, retains a 20% commission, and remits the cash due to Cullumbat Prepare all the necessary journal entries on the books of Cullumber Manufacturing to record the consignment transactions. (Credit account files are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts.) No. Account Titles and Explanation Debit Credit 1. (To record shipped merchandise) 2. (To record year end sales entry) 3. (To record year end cost of goods) Prepare the journal entries on the books of CMR Retailing to record the consignment + transactions No. Account Titles and Explanation Debit Credit 1. (To record year end sales entry) 2. (To record remittance to consignor) MacBook Air

Answer 1

BOOKS OF CULLUMBER MANUFACTURING INC. Account Titles and Explanation Debit Credit Consignment Inventory $ 101,500 Inventory $ 101,500 (to record shipped merchandise ) $ $ 58,800 14,700 Cash Commission Expense Consigment Revenue (to record year end sales entry) $ 73,500 $ 65,975 Cost of Goods Sold Consignment Inventory (to record year end cost of goods sold ) $ 65,975 Credit BOOKS OF CMR RETAILING LTD. Account Titles and Explanation Debit Cash $ 73,500 Consigment Sales (to record year end sales entry) $ 73,500 $ 73,500 Consigment Sales Commission Income Cash (to record remittance to consinor) $ $ 14,700 58,800

Working Notes -

Commission of CMR Retailing = 20% of Sales

= 20% * 73,500

= $14,700

Cash remitted to Cullumber Manufacturing Inc. = Sales made by CMR - Commission retained

= 73,500 - 14,700

= $58,800

Cost of Goods Sold = % of Goods Sold * Price of Merchandise Cullumber Inc sent to CMR

= 65% * 101,500

= $65,975

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