Consignment means that your goods are being sold by a third party who holds the physical product. To use this option, tick the box in the Sales Settings and set a default account for consignment fees:

 In this scenario:

• The stock remains on your books and you retain ownership until sold by the third party.
• The third party reports sales on a regular basis and this is when the sale is recorded rather than the actual time of sale.
• The third party who sold your inventory will be paid a fee for the sale.

Following setting required for this scenario:

• Set up a new storage location that is designated as a consignment location.
• Put a tickle “Consignee” for the customer designated as a consignee.
• A Consignment Warehouse transfer to record the movement of inventory to the consignee location.  (only causes changes in location, not quantity overall)
• A Cash Sale to record the sale of the consigned goods and to record the consignee fee.  (decreases inventory and records sales)

Accounting #

Recording a Consignemnt sale creates the following transactions in the General Journal:

• Debits: Assets account (e.g. Bank account) Note: no Accounts Receivable created!
• Debits: Cost of Goods Sold (for inventoried items)
• Credits: Revenue
• Credits: Inventory (for inventories items)
• Credits: VAT (if applicable)