Question 5 OR (e)

Departmental Trading and Profit and Loss Account and Balance Sheet (two departments)

8 marks

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

Question

Question 5 OR (e) · 8 marks

Using the Trial Balance below, prepare the Departmental Trading and Profit and Loss Account for the year that ended on 31st March 2025 and the Balance sheet as at that date:

Particulars		Dr. (Rs.)	Cr. (Rs.)
Stock on 1-4-2025	Department A	72,000
	Department B	60,000
Purchases	Department A	96,000
	Department B	84,000
Sales	Department A		2,40,000
	Department B		2,16,000
Wages	Department A	18,000
	Department B	6,000
Rent		12,000
Salaries		19,200
Lighting and Heating		7,200
Discounting Allowed		1,800
Discount Received			2,280
Advertising		3,240
Carriage Inwards		1,800
Furniture and Fittings		13,440
Plant and Machinery		19,200
Sundry Debtors		16,800
Sundry Creditors			12,000
Drawings		2,400
Cash in Hand		13,200
Cash at Bank		84,000
Capital			60,000
TOTAL		5,30,280	5,30,280

Further information:

Rent, Lighting and Heating, Salaries and Depreciation are to be shared between Departments A and B in the ratio of 2:1.
Other expenses and income are to be apportioned on a suitable basis,
Make these adjustments:

Rent prepaid Rs. 1200; Lighting and Heating outstanding Rs. 1440; Depreciation is to be provided @ 10% per annum on Furniture and Fittings and Plant and Machinery.

Stock at 31st March, 2025: Department A Rs. 12,000, Department B Rs. 18,000.

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

(i)–(iv)4 items, each marked on its own: give each its share.
prepare … AccountProper formats (heading, date, both sides): post the plain items, then each adjustment, and balance last.

What the paper leaves open

The opening stock is dated "1-4-2025", the day after the year it belongs to ends; it is read as the stock at the start of the year (1-4-2024).
"Other expenses and income" are apportioned on these bases: discount allowed and advertising by sales, and carriage inwards and discount received by purchases.
The rent prepaid and the lighting and heating outstanding are adjusted before the 2:1 apportionment.
Depreciation at 10% per annum is charged for a full year.

Write it in this order

Read the data; tick every adjustment as you plan it 1 min
1 Departmental Trading Account 2 marks 4 min
2 Adjustments (prepaid rent, outstanding lighting, depreciation) and 2:1 sharing 2 marks 4 min
3 Other items on suitable bases; departmental net profits 2 marks 3 min
4 Balance Sheet 2 marks 3 min
Check: every adjustment used, both sides agree, dates in 1 min

1234

Try it first. About 16 minutes for 8 marks. Write it out, then open the solution.

Solution

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

Bases of apportionment

There is no universally accepted basis; the DU text suggests sales for selling expenses and discount allowed, and the value of assets for depreciation. Its worked illustration shares salaries 2:1 and advertisement in the ratio of sales. Here the question fixes 2:1 for rent, lighting and heating, salaries and depreciation. The rest are shared on these bases:

Item	Basis	A (₹)	B (₹)
Discount allowed 1,800	Sales 2,40,000: 2,16,000	947	853
Advertising 3,240	Sales 2,40,000: 2,16,000	1,705	1,535
Carriage inwards 1,800	Purchases 96,000: 84,000	960	840
Discount received 2,280	Purchases 96,000: 84,000	1,216	1,064

Sales-ratio shares are rounded to the rupee. Carriage inwards is part of the cost of goods bought, so it follows purchases. The DU table lists "carriage" under the sales basis; on that basis A would bear ₹947 and B ₹853 (see the end).

Adjustments before apportionment. Prepaid and outstanding expenses are adjusted so that each period bears its own expense. Rent: 12,000 − prepaid 1,200 = 10,800, shared 7,200: 3,600. Lighting and heating: 7,200 + outstanding 1,440 = 8,640, shared 5,760: 2,880. Depreciation: 10% × (13,440 + 19,200) = 3,264, shared 2,176: 1,088.

Departmental Trading Account for the year ended 31st March 2025

2 marks

Dr	A (₹)	B (₹)	Cr	A (₹)	B (₹)
To Opening stock	72,000	60,000	By Sales	2,40,000	2,16,000
To Purchases	96,000	84,000	By Closing stock	12,000	18,000
To Wages	18,000	6,000
To Carriage inwards	960	840
To Gross profit c/d	65,040	83,160
	2,52,000	2,34,000		2,52,000	2,34,000

Departmental Profit and Loss Account for the year ended 31st March 2025

Dr	A (₹)	B (₹)	Cr	A (₹)	B (₹)
To Rent	7,200	3,600	By Gross profit b/d	65,040	83,160
To Lighting and heating	5,760	2,880	By Discount received	1,216	1,064
To Salaries	12,800	6,400
To Depreciation	2,176	1,088
To Discount allowed	947	853
To Advertising	1,705	1,535
To Net profit	35,668	67,868
	66,256	84,224		66,256	84,224

Total net profit: 35,668 + 67,868 = ₹1,03,536.

Balance Sheet as at 31st March 2025

2 marks

Liabilities

Liabilities	Detail	₹
Capital	60,000 + net profit 1,03,536 − drawings 2,400	1,61,136
Sundry creditors		12,000
Lighting and heating outstanding		1,440
Total		1,74,576

Assets

Assets	Detail	₹
Furniture and fittings	13,440 − depreciation 1,344	12,096
Plant and machinery	19,200 − depreciation 1,920	17,280
Closing stock	A 12,000 + B 18,000	30,000
Sundry debtors		16,800
Cash in hand		13,200
Cash at bank		84,000
Rent prepaid		1,200
Total		1,74,576

Another basis (for the reviewer). If carriage were shared by sales as in the DU table, A would bear ₹947 and B ₹853. Net profit would be A ₹35,681 and B ₹67,855; the total, and the Balance Sheet, are unchanged.

Where the 8 marks sit

#	Component	Marks
1	Departmental Trading Account	2
2	Adjustments (prepaid rent, outstanding lighting, depreciation) and 2:1 sharing	2
3	Other items on suitable bases; departmental net profits	2
4	Balance Sheet	2
	Total	8

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