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What would be the accounting entries for Bill and hold arrangements and Consignment inventory?
Will bill and hold arrangement be considered a liability and consignment inventory an asset?But still, even if it is so, could you tell me the debit and credit entries for these 2 transactions?
In this case, Bill and hold is from the sellers point of view and consignment inventory is from the Company’s point of view who have transferred the goods to lets say a retail business. The retail business has the inventory, however the owner is still the Company since its on consignment basis.
Thank you
Hi,
On consignment inventory it all depends on who has the risks and rewards of the sale. If the seller has the risk and rewards then there is no sale recognised, but if the seller has transferred the risks and rewards then the sale is recognised. I think you’ll be able to work the double entry for this sale, regardless of the fact that it is in relation to consignment inventory.
Bill and hold is when the sale is made and cash received but the goods are not despatched. Again the key is the risk and rewards but if we’ve not transferred them then the money received is not recognised as revenue but as deferred income.
Thanks
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