A Consignment  store is a good idea for a business, as stock is free - start-up costs can be minimal - here are instructions for the accounting (Canada)

Bookkeeping Entries for Consignment Accounting

In Canada, CRA accepts two methods of consignment accounting. They are sale by agent arrangements and purchase and resale arrangements.

Purchase and resale arrangements require both the consignor and the consignee to charge and account for the GST/HST while sale by agent arrangements requires only the consignor to charge and account for GST/HST.

So warm up your tea … and let's start this chat by clarifying our definitions first ... because I don't know about you, but I always mix up the "ee"s and "ors"

Consignor refers to the owner of the goods.

Consignee refers to the agent acting on the owner's behalf to sell the goods.

Another way to describe these parties would be to say:

The Consignor is the owner and sender of the goods while the consignee is the receiver of the goods for sale.

Okay, now that we have that out of the way, let's figure out how we would do consignment accounting if we are the consignee ... that is we are the store receiving the goods to sell.

Scenario One - Consignment Store Using Purchase and Resale Arrangements

As I use QuickBooks software, I will use QuickBooks examples to illustrate my points.

If at any time you don't get what I'm saying, key in "consignment" into the QuickBooks help menu to find more details on how to set everything up. I'm sure the Simply Accounting help menu would be similar.

Consignment Accounting
Setting Up Your Books to Handle Consignment Sales

1. Create a vendor name in QuickBooks for every consignor you receive goods from.
2. Create an income account called Consignment Sales to track your sales.
   • Technically, the sale does not "belong to you" but as a store owner, I want to be able to use QuickBooks to report and analyze my consignment sales