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How to account for consignment sales

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Can you help me with this question? Is this supposed to be two journals ( part b).? I am confused where to place what.

Green Lawn Chemical Company sells lawn and garden chemicals through several hundred garden supply shores and department store garden shops. It was Green Lawn's policy to ship goods to these retailers in late winter on a consignment basis. Periodically, a Green Lawn field representative would count the Green Lawn products on hand at a retailer; based on this count, the previous count, and intervening shipments, it was determined how many items the retailer had sold since the previous count, and the retailer was billed for these goods by Green Lawn.

a. Assume Green Lawn shipped goods costing Green Lawn $8,400 and with a wholesale price (i.e. price to the retailer, not the end user) of $12,600 to Carson's Garden Shop. Prepare journal entries to record this entry (1) on Green Lawn's books and (2) on Carson's books.

b. Later, the field representative's count indicated that Carson's had sold some of these good's totaling $6,720 at retail, $5,040 at wholesale, and $3,360 at Green Lawn's cost. Prepare journal entries to reflect these sales (1) on Green Lawn's books.

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Solution Preview

The problem only asks for entries on Green's books, but let's review how consignment sales work:

1. Green records the transfer to the consignee, but doesn't record any income until the consignee sells the goods.
2. Green sells at wholesale; Carson sells at ...

Solution Summary

The solution briefly explains the concept of consignment sales including how and when to record the transactions, and how much to record.

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