Question 5 (c)
Departmental Trading and Profit & Loss Account (three departments)
7 marks
- Time to write
- About 14 minutes
- Notes
- Crux notes
Question
Question 5 (c) · 7 marksA business enterprise has three departments. Its details for the year that ended on 31st March, 2025 are given below:
| Particulars | Deptt. X (₹) | Deptt. Y (₹) | Deptt. Z (₹) |
|---|---|---|---|
| Opening Stock | 24,000 | 36,000 | 48,000 |
| Purchases | 2,19,600 | 2,22,000 | 3,00,000 |
| Sales | 3,60,000 | 4,20,000 | 4,80,000 |
| Sales Return | 12,000 | 12,000 | 12,000 |
| Purchase Return | 3,600 | 6,000 | 12,000 |
| Wages | 36,000 | 30,000 | 48,000 |
Closing Stock: Department X ₹36,000, Department Y ₹42,000; Department Z ₹60,000. Other expenses were as follows:
Rent and Rates ₹36,000 (Departments X, Y and Z occupied space in the respective ratio of 2/10, 3/10 and 5/10).
Salaries of ₹1,08,000 are to be shared among Departments X, Y and Z, in the ratio 5:6:4 respectively.
Advertisement expenses and discount allowed ₹30,600 and ₹6,120 respectively.
Sundry expenses of ₹25,200 are to be divided equally.
Prepare the Departmental Trading and Profit and loss Account for the year that ended on 31st March, 2025.
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
Read from the question
- Prepare … AccountProper formats (heading, date, both sides): post the plain items, then each adjustment, and balance last.
What the paper leaves open
The paper gives the advertisement expenses and the discount allowed but no basis for sharing them; the answer apportions both on the sales ratio (net sales), the basis the DU text uses for selling expenses and discount allowed. Any other basis changes each department's profit but not the total.
Write it in this order
- Read the data; tick every adjustment as you plan it 1 min
- 1 Departmental Trading Account net sales, net purchases, wages, closing stock 3 marks 5 min
- 2 Apportionment of the common expenses on the printed bases, and of advertisement and discount on net sales 2 marks 3 min
- 3 Departmental Profit & Loss Account and net profits 2 marks 3 min
- Check: every adjustment used, both sides agree, dates in 2 min
Try it first. About 14 minutes for 7 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 of allocation; expenses are shared on some common basis, and the DU text suggests floor area for rent and rates, and sales for selling expenses and discount allowed. Its worked illustration apportions advertisement in the ratio of sales.
| Item | Basis | X (₹) | Y (₹) | Z (₹) |
|---|---|---|---|---|
| Rent and rates 36,000 | Space 2/10: 3/10: 5/10 (printed) | 7,200 | 10,800 | 18,000 |
| Salaries 1,08,000 | 5: 6: 4 (printed) | 36,000 | 43,200 | 28,800 |
| Advertisement 30,600 | Net sales 3,48,000: 4,08,000: 4,68,000 = 29: 34: 39 | 8,700 | 10,200 | 11,700 |
| Discount allowed 6,120 | Net sales 29: 34: 39 | 1,740 | 2,040 | 2,340 |
| Sundry expenses 25,200 | Equally (printed) | 8,400 | 8,400 | 8,400 |
Net sales = sales less sales returns: X 3,60,000 − 12,000; Y 4,20,000 − 12,000; Z 4,80,000 − 12,000. Net purchases = purchases less purchase returns: X 2,19,600 − 3,600 = 2,16,000; Y 2,22,000 − 6,000 = 2,16,000; Z 3,00,000 − 12,000 = 2,88,000.
Departmental Trading Account for the year ended 31st March, 2025
| Dr | X (₹) | Y (₹) | Z (₹) | Cr | X (₹) | Y (₹) | Z (₹) |
|---|---|---|---|---|---|---|---|
| To Opening stock | 24,000 | 36,000 | 48,000 | By Sales less returns | 3,48,000 | 4,08,000 | 4,68,000 |
| To Purchases less returns | 2,16,000 | 2,16,000 | 2,88,000 | By Closing stock | 36,000 | 42,000 | 60,000 |
| To Wages | 36,000 | 30,000 | 48,000 | ||||
| To Gross profit c/d | 1,08,000 | 1,68,000 | 1,44,000 | ||||
| 3,84,000 | 4,50,000 | 5,28,000 | 3,84,000 | 4,50,000 | 5,28,000 |
Departmental Profit & Loss Account for the year ended 31st March, 2025
| Dr | X (₹) | Y (₹) | Z (₹) | Cr | X (₹) | Y (₹) | Z (₹) |
|---|---|---|---|---|---|---|---|
| To Rent and rates | 7,200 | 10,800 | 18,000 | By Gross profit b/d | 1,08,000 | 1,68,000 | 1,44,000 |
| To Salaries | 36,000 | 43,200 | 28,800 | ||||
| To Advertisement | 8,700 | 10,200 | 11,700 | ||||
| To Discount allowed | 1,740 | 2,040 | 2,340 | ||||
| To Sundry expenses | 8,400 | 8,400 | 8,400 | ||||
| To Net profit | 45,960 | 93,360 | 74,760 | ||||
| 1,08,000 | 1,68,000 | 1,44,000 | 1,08,000 | 1,68,000 | 1,44,000 |
| Net profit | ₹ |
|---|---|
| Department X | 45,960 |
| Department Y | 93,360 |
| Department Z | 74,760 |
| Total | 2,14,080 |
Where the 7 marks sit
| # | Component | Marks |
|---|---|---|
| 1 | Departmental Trading Account (net sales, net purchases, wages, closing stock) | 3 |
| 2 | Apportionment of the common expenses on the printed bases, and of advertisement and discount on net sales | 2 |
| 3 | Departmental Profit & Loss Account and net profits | 2 |
| Total | 7 |
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