unit-10-consignment-accounts-i

Unit-10 Consignment Accounts-I

Learn about various concepts relating to consignment and the basic framework of accounting for consignment transactions.

Under what circumstances can the consignee get a special commission?




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Learning Pundits Content Team

Written on Apr 16, 2019 4:54:51 PM

Special Commission: This is the commission which the consignee gets over and above the ordinary commission. It can be sub-divided into two categories:

a) Over-riding Commission: This is an extra commission allowed over and above the normal commission and is generally offered when the agent is required to put in hard work either in introducing a new product in the market or where he is entrusted with the work of supervising the performance of other agents in a particular area. This commission is also given for sales at prices higher than the price fixed by the consignor.

b) Del Credre Commission: Usually, all the losses are borne by the consignor. Sometimes the consignor expecting that the consignee should also be responsible for recovering the debts and bear the loss on account of bad debts if any. In order to compensate him for this responsibility he is given some extra commission called 'Del Credre Commission'. Such commission is calculated on the total sales unless there is a special agreement to the effect that it is to be paid only on the amount of credit sales. Payment of this commission imposes extra liability on the consignee and induces him to deal in a prudent and cautious manner.