Question

Carla Corporation shipped $19,300 of merchandise on consignment to Gooch Company. Carla paid freight costs of $2,100. Gooch Company paid $550 for local advertising, which is reimbursable from Carla. By year-end, 63% of the merchandise had been sold for $20,900. Gooch notified Carla, retained a 10% commission, and remitted the cash due to Carla.

Prepare Carla’s journal entry when the cash is received. (Round answers to 0 decimal places, e.g. 1,525. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit
(To record the cash remitted to Carla.)
(To record the cost of inventory sold on consignment.)

Answer 1

Account Title	Debit	Credit
Cash(balance Figure)	$18,260
Advertising Expenses	$550
Commission Expense($20900 * 10%)	$2,090
Revenue from consignment		$20,900

(To record entry for cash received on consignment)

Cash received => Revenue - Commission - Advertising expense => $20,900 - 2090 - 550 = $18,260.

Account Title	Debit	Credit
Cost of goods sold	$13,482
Inventory on consignment		$13,482

(To record the cost of goods sold.)

Cost of good sold =>63% (Mechandise cost + Freight) => 63% of $19300 + $2,100 = $13,482.

If you have any doubts please comment on the answer.