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What journal entry is recorded by the consignor when the consignee sells the good or service?

You need to understand that when the product is initially transferred from the consignor to the consignee, there is no sale, and the consignor would not record any impact to the income statement. The consignor only records the sale when the consignee sells the goods to a 3rd party.

When the inventory is sold, the consignor records the revenue and has to recognize the commission expense for the commission fee paid to the consignee. The consignor would remove the inventory from the balance sheet and recognize the cash. On the income statement, the consignor would debit cost of goods sold and commission expense, with the offset to sales revenue.


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