Question 5 (b)

Departmental accounts (two departments)

8 marks

Time to write: About 16 minutes
Topic: Departmental accounts
Notes: Crux notes

Question

Question 5 (b) · 8 marks

Aparna Ltd. has two departments, A and B, and the latter department gets all its requirements from the A Department at the cost price. The trial balance on December 31st 2024 was:

Particulars	Debit (₹)	Credit (₹)
Share Capital		1,35,400
Stock (A Department)	50,000
Stock (B Department)	3,000
Purchases- A	6,00,000
Purchases- B	6,000
Sales- A		6,80,000
Sales- B		82,000
Transfer of goods to B Department	30,000	30,000
Director's Fees and remuneration	18,000
Wages and Salaries-A	12,000
Wages and Salaries-B	24,000
Rent and Rates (3/4 to A)	4,800
Lighting (3/4 to B)	1,200
Depreciation-B	3,000
Depreciation -A	600
Office Expenses	1,800
Furniture and Fitting	12,000
Office Salaries	9,000
Equipment	30,000
Carriage Inward(A)	36,000
Investment	60,000
Income from Investments		6,000
Cash at Bank	32,000
Total	9,33,400	9,33,400

Closing Stock of A on hand was ₹55,000 and that in B amounted to ₹4,500. It is desired to prepare complete Departmental Accounts, including the General Profit and Loss Account and the Balance Sheet.

Reworded from the university paper: names and figures differ, the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.

Before you write

Read off the question and its marks

16 minfor 8 marks

Read from the question

prepare complete Departmental AccountsProper formats (heading, date, both sides): post the plain items, then each adjustment, and balance last.

What the paper leaves open

Transfers to B are at cost, so they carry no unrealised profit and need no stock reserve.
Rent and rates are shared 3/4 to A and the rest to B, and lighting 3/4 to B and the rest to A, as printed.
The other expenses not marked to a department (director's fees and remuneration, office expenses, office salaries) are charged in the General Profit and Loss Account, with the investment income.

Write it in this order

Workings as you go: each statement feeds the next.

Read the data; tick every adjustment as you plan it 1 min
1 Departmental Trading & P&L gross and net profit per department 4 marks 7 min
2 General Profit & Loss Account 2 marks 3 min
3 Balance Sheet balances 2 marks 3 min
Check: every adjustment used, both sides agree, dates in 2 min

123

Short on time? Step 1 carries 4 of the 8 marks: guard its minutes.

Final answer

Check your own figures against these.

Dept net profit A: ₹62,500, B ₹18,400
Overall net profit: ₹58,100
Balance sheet: ₹1,93,500; balances

Try it first. About 16 minutes for 8 marks. Write it out, then open the solution and check your figures against the final answer.

Solution

Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.

Because B receives its goods from A at cost, there is no loading on inter-departmental transfers, so no unrealised-profit stock reserve is required on B's closing stock.

Departmental Trading and Profit & Loss Account for the year ended 31 December 2024

Particulars	Dept A ₹	Dept B ₹	Particulars	Dept A ₹	Dept B ₹
To Opening stock	50,000	3,000	By Sales	6,80,000	82,000
To Purchases	6,00,000	6,000	By Transfer to B (at cost)	30,000	—
To Transfer from A (at cost)	—	30,000	By Closing stock	55,000	4,500
To Carriage inward	36,000	—
To Wages and salaries	12,000	24,000
To Gross Profit c/d	67,000	23,500
	7,65,000	86,500		7,65,000	86,500
To Rent and rates	3,600	1,200	By Gross Profit b/d	67,000	23,500
To Lighting	300	900
To Depreciation	600	3,000
To Net Profit (to General P&L)	62,500	18,400
	67,000	23,500		67,000	23,500

Cost charged against each department's turnover before gross profit:

Working	Dept A ₹	Dept B ₹
Opening stock	50,000	3,000
Purchases	6,00,000	6,000
Transfer from A (at cost)	—	30,000
Carriage inward	36,000	—
Wages and salaries	12,000	24,000
Total cost charged	6,98,000	63,000

General Profit & Loss Account for the year ended 31 December 2024

Dr	₹	Cr	₹
To Director's fees and remuneration	18,000	By Net profit: Dept A	62,500
To Office expenses	1,800	By Net profit: Dept B	18,400
To Office salaries	9,000	By Income from investments	6,000
To Net Profit transferred to Balance Sheet	58,100
	86,900		86,900

Dr	₹
To Director's fees and remuneration	18,000
To Office expenses	1,800
To Office salaries	9,000
To Net Profit transferred to Balance Sheet	58,100
	86,900
Cr	₹
By Net profit: Dept A	62,500
By Net profit: Dept B	18,400
By Income from investments	6,000
	86,900

Balance Sheet as on 31 December 2024

Liabilities	₹	Assets	₹
Share Capital	1,35,400	Furniture and fitting	12,000
Net Profit	58,100	Equipment	30,000
		Investment	60,000
		Closing stock (A 55,000 + B 4,500)	59,500
		Cash at bank	32,000
	1,93,500		1,93,500

Result: Dept net profit A ₹62,500, B ₹18,400 · overall net profit ₹58,100 · balance sheet ₹1,93,500 (balances).

Working notes

Apportionment. Rent and rates ₹4,800 → ¾ A ₹3,600, ¼ B ₹1,200. Lighting ₹1,200 → ¾ B ₹900, ¼ A ₹300. Wages & salaries and depreciation are given per department. Director's fees, office expenses and office salaries are common/general and go to the General P&L, not to the departments.
No stock reserve. Transfers are at cost, so B's closing stock carries no inter-departmental profit.

Where the 8 marks sit

#	Component	Marks
1	Departmental Trading & P&L (gross and net profit per department)	4
2	General Profit & Loss Account	2
3	Balance Sheet (balances)	2
	Total	8

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