Explanation Consignment Sale: In consignment sale, goods are given to another party to sell. Other party takes a percentage of revenue as its income for the work done. When inventory is transferred to consignee, he cannot record the inventory in his book as he acts as an agent. So, if the consignee cannot record the inventory in its book, then firm also cannot record entry in its books. Since, no entry can be recorded of sale. Hence, revenue cannot be recognized by the firm. Option a: Journalizing: Journalizing is the process of recording the transactions of an organization in a chronological order. Based on these journal entries recorded, the accounts are posted to the relevant ledger accounts. Accounting rules for journal entries: To increase balance of the account: Debit assets, expenses, losses and credit all liabilities, capital, revenue and gains. To decrease balance of the account: Credit assets, expenses, losses and debit all liabilities, capital, revenue and gains. Adjusting entry as on December 31 is: Date Account Title and Explanation Post ref...

Intermediate Accounting - Myaccountinglab - Pearson Etext Access Card Student Value Edition

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Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella

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