Question 5 (b)
Departmental Trading and Profit & Loss Account (three departments)
10 marks
- Time to write
- About 20 minutes
- Notes
- Crux notes
Question
Question 5 (b) · 10 marksM/s. Shivalik Emporium is a Departmental Store with three departments, X, Y and Z. Information regarding the three departments for the year ended 31st March, 2024 is given here:
| Particulars | Dept. X | Dept. Y | Dept. Z |
|---|---|---|---|
| Opening Stock | 21,600 | 14,400 | 12,000 |
| Purchases | 79,200 | 52,800 | 26,400 |
| Debtors at end | 9,000 | 6,000 | 6,000 |
| Sales | 1,08,000 | 81,000 | 54,000 |
| Closing Stock | 27,000 | 10,500 | 12,600 |
| Value of furniture in each Department | 12,000 | 12,000 | 6,000 |
| Floor space occupied by each Dept. (in sq. ft.) | 1,800 | 1,500 | 1,200 |
| Number of employees in every Department | 25 | 20 | 15 |
| Electricity consumed by each Department (in units) | 360 | 240 | 120 |
Additional Information:
| Particulars | Amount (Rs.) |
|---|---|
| Carriage inwards | 1,800 |
| Carriage outwards | 3,240 |
| Salaries | 28,800 |
| Advertisement | 3,240 |
| Discount allowed | 2,700 |
| Discount received | 2,160 |
| Rent, Rates and Taxes | 9,000 |
| Depreciation on furniture | 1,200 |
| Electricity Expenses | 3,600 |
| Labour welfare expenses | 2,880 |
Prepare the Departmental Trading and Profit & Loss Account for the year that ended 31st March, 2023, after providing provision for Bad Debts at 5%.
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 data are for the year ended 31st March 2024 (in our version) but the account is asked for the year ended 31st March 2023; the second date is read as a misprint, and one year is used throughout.
- The paper does not say how the common expenses are shared; each is apportioned on the measure given that fits it: carriage inwards and discount received on purchases; carriage outwards, advertisement and discount allowed on sales; salaries and labour welfare on the number of employees; rent, rates and taxes on floor space; depreciation on the value of furniture; electricity on units consumed.
- The provision for bad debts is 5% of each department's own closing debtors, charged directly.
Write it in this order
Working notes first: they feed the statements.
- Read the data; tick every adjustment as you plan it 1 min
- 1 Bases of apportionment WN1 3 marks 5 min
- 2 Trading section, three departments 3 marks 5 min
- 3 Profit & Loss section with the provision for bad debts 4 marks 7 min
- Check: every adjustment used, both sides agree, dates in 2 min
Final answer
Check your own figures against these.
- Gross profit X
- ₹33,300
- Y
- ₹23,700
- Z
- ₹27,900
- Total
- ₹84,900
- Net profit X ₹10,770
- Y
- ₹5,820
- Z
- ₹14,760
- Total
- ₹31,350
Try it first. About 20 minutes for 10 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.
Conventions committed to
Departmental accounts exist so that the performance of each part of the business can be observed and measured separately, not merely that of the enterprise as a whole. Under the joint-accounts method used here, one columnar Trading and Profit & Loss Account carries a column per department, and shared costs are allocated on some common basis; the DU prescribed text is explicit that there is no universally acceptable basis of allocation and offers a table of suggested measures instead.
- Carriage inwards is a Trading item; carriage outwards is not. Carriage inwards is a cost of bringing goods in, so it sits above the gross profit line and is apportioned on purchases. Carriage outwards is a cost of getting goods to customers, so it belongs in the Profit & Loss section and follows sales.
- Each base is used for the expense it measures. Two match the prescribed text's own table exactly: depreciation on the value of assets, and utilities on the consumption pattern, which is why electricity follows units consumed rather than floor space. Salaries and labour welfare follow the number of employees.
- The provision for bad debts is not apportioned. Each department's closing debtors are given separately, so 5% is charged directly to the department that owns them.
Working notes
WN1Basis of apportionment
| Common amount | ₹ | Basis used | Ratio | Dept. X | Dept. Y | Dept. Z |
|---|---|---|---|---|---|---|
| Carriage inwards | 1,800 | Purchases | 3: 2: 1 | 900 | 600 | 300 |
| Carriage outwards | 3,240 | Sales | 4: 3: 2 | 1,440 | 1,080 | 720 |
| Salaries | 28,800 | Number of employees | 5: 4: 3 | 12,000 | 9,600 | 7,200 |
| Advertisement | 3,240 | Sales | 4: 3: 2 | 1,440 | 1,080 | 720 |
| Discount allowed | 2,700 | Sales | 4: 3: 2 | 1,200 | 900 | 600 |
| Discount received | 2,160 | Purchases | 3: 2: 1 | 1,080 | 720 | 360 |
| Rent, rates and taxes | 9,000 | Floor space | 6: 5: 4 | 3,600 | 3,000 | 2,400 |
| Depreciation on furniture | 1,200 | Value of furniture | 2: 2: 1 | 480 | 480 | 240 |
| Electricity expenses | 3,600 | Units consumed | 3: 2: 1 | 1,800 | 1,200 | 600 |
| Labour welfare expenses | 2,880 | Number of employees | 5: 4: 3 | 1,200 | 960 | 720 |
| Provision for bad debts | 1,050 | Direct: 5% of own debtors | not apportioned | 450 | 300 | 300 |
Every split divides exactly into whole rupees.
Departmental Trading and Profit & Loss Account for the year ended 31 March 2024
Trading section: debit
| Particulars | Dept. X ₹ | Dept. Y ₹ | Dept. Z ₹ | Total ₹ |
|---|---|---|---|---|
| To Opening Stock | 21,600 | 14,400 | 12,000 | 48,000 |
| To Purchases | 79,200 | 52,800 | 26,400 | 1,58,400 |
| To Carriage Inwards | 900 | 600 | 300 | 1,800 |
| To Gross Profit c/d | 33,300 | 23,700 | 27,900 | 84,900 |
| 1,35,000 | 91,500 | 66,600 | 2,93,100 |
Trading section: credit
| Particulars | Dept. X ₹ | Dept. Y ₹ | Dept. Z ₹ | Total ₹ |
|---|---|---|---|---|
| By Sales | 1,08,000 | 81,000 | 54,000 | 2,43,000 |
| By Closing Stock | 27,000 | 10,500 | 12,600 | 50,100 |
| 1,35,000 | 91,500 | 66,600 | 2,93,100 |
Profit & Loss section: debit
| Particulars | Dept. X ₹ | Dept. Y ₹ | Dept. Z ₹ | Total ₹ |
|---|---|---|---|---|
| To Carriage Outwards | 1,440 | 1,080 | 720 | 3,240 |
| To Salaries | 12,000 | 9,600 | 7,200 | 28,800 |
| To Advertisement | 1,440 | 1,080 | 720 | 3,240 |
| To Discount Allowed | 1,200 | 900 | 600 | 2,700 |
| To Rent, Rates and Taxes | 3,600 | 3,000 | 2,400 | 9,000 |
| To Depreciation on Furniture | 480 | 480 | 240 | 1,200 |
| To Electricity Expenses | 1,800 | 1,200 | 600 | 3,600 |
| To Labour Welfare Expenses | 1,200 | 960 | 720 | 2,880 |
| To Provision for Bad Debts | 450 | 300 | 300 | 1,050 |
| To Net Profit | 10,770 | 5,820 | 14,760 | 31,350 |
| 34,380 | 24,420 | 28,260 | 87,060 |
Profit & Loss section: credit
| Particulars | Dept. X ₹ | Dept. Y ₹ | Dept. Z ₹ | Total ₹ |
|---|---|---|---|---|
| By Gross Profit b/d | 33,300 | 23,700 | 27,900 | 84,900 |
| By Discount Received | 1,080 | 720 | 360 | 2,160 |
| 34,380 | 24,420 | 28,260 | 87,060 |
Result: Gross profit X ₹33,300 · Y ₹23,700 · Z ₹27,900 · total ₹84,900. Net profit X ₹10,770 · Y ₹5,820 · Z ₹14,760 · total ₹31,350.
Where the 10 marks sit
| # | Component | Marks |
|---|---|---|
| 1 | Bases of apportionment (WN1) | 3 |
| 2 | Trading section, three departments (→ gross profit 84,900) | 3 |
| 3 | Profit & Loss section with the provision for bad debts (→ net profit 31,350) | 4 |
| Total | 10 |
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