Question 5 (a)
Departmental Trading and Profit and Loss Account
12 marks
- Time to write
- About 24 minutes
- Notes
- Crux notes
Question
Question 5 (a) · 12 marksKirti Ltd. has two departments, Department A and Department B. On the basis of the information given below, you are required to prepare the Departmental Trading and Profit and Loss Account for the year that ended 31st March 2024:
| Particulars | Department A (Rs.) | Department B (Rs.) |
|---|---|---|
| Opening Stock | 60,000 | 48,000 |
| Purchases | 5,52,000 | 4,56,000 |
| Sales | 15,19,200 | 11,80,800 |
| Sales Returns | 7,200 | 4,800 |
| Closing Stock | 72,000 | 43,200 |
| Wages | 1,92,000 | 1,44,000 |
| Salaries | 96,000 | 60,000 |
The other common expenses are: Rent Rs. 36,000, Electricity Rs. 14,400, Depreciation Rs. 43,200, Selling Expenses Rs. 19,200, Labour Welfare expenses Rs. 30,000.
| Other relevant information | ||
|---|---|---|
| Department A | Department B | |
| Light Points | 30 | 15 |
| Value of Assets | 3,60,000 | 2,88,000 |
| Floor area occupied | 750 | 500 |
| No of employees | 120 | 80 |
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
No basis is given for the common expenses; each is apportioned on the base that suits it: rent on floor area, electricity on light points, depreciation on the value of assets, selling expenses on net sales, and labour welfare on the number of employees.
Write it in this order
Working notes first: they feed the statements.
- Read the data; tick every adjustment as you plan it 2 min
- 1 Bases chosen and apportionment of common expenses 4 marks 7 min
- 2 Departmental Trading Account 4 marks 7 min
- 3 Departmental Profit and Loss Account 4 marks 6 min
- Check: every adjustment used, both sides agree, dates in 2 min
Final answer
Check your own figures against these.
- Gross profit A
- ₹7,80,000, B ₹5,71,200
- Net profit A
- ₹6,00,000, B ₹4,52,400
- The business as a whole
- ₹10,52,400, which agrees with the undivided figures
Try it first. About 24 minutes for 12 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.
Basis of the answer
- Joint accounts. One Trading and Profit and Loss Account with a column for each department shows each department's result.
- Direct items (stock, purchases, sales, returns, wages, salaries) are given for each department.
- Common expenses have no printed basis, so each goes on the base that suits it. There is no universally accepted basis; the DU text's suggested measures are floor area for rent, light points for lighting, the value of assets for depreciation and sales for selling expenses. Labour welfare goes on the number of employees.
Working notes
Working notes
| Expense | Basis | Total ₹ | A ₹ | B ₹ |
|---|---|---|---|---|
| Rent | Floor area, 750: 500 = 3: 2 | 36,000 | 21,600 | 14,400 |
| Electricity | Light points, 30: 15 = 2: 1 | 14,400 | 9,600 | 4,800 |
| Depreciation | Value of assets, 3,60,000: 2,88,000 = 5: 4 | 43,200 | 24,000 | 19,200 |
| Selling expenses | Net sales, 15,12,000: 11,76,000 = 9: 7 | 19,200 | 10,800 | 8,400 |
| Labour welfare | Employees, 120: 80 = 3: 2 | 30,000 | 18,000 | 12,000 |
Departmental Trading Account for the year ended 31st March 2024
4 marks| Dr | A ₹ | B ₹ | Cr | A ₹ | B ₹ |
|---|---|---|---|---|---|
| To Opening Stock | 60,000 | 48,000 | By Sales less returns (A 15,19,200 − 7,200; B 11,80,800 − 4,800) | 15,12,000 | 11,76,000 |
| To Purchases | 5,52,000 | 4,56,000 | By Closing Stock | 72,000 | 43,200 |
| To Wages | 1,92,000 | 1,44,000 | |||
| To Gross Profit c/d | 7,80,000 | 5,71,200 | |||
| 15,84,000 | 12,19,200 | 15,84,000 | 12,19,200 |
Departmental Profit and Loss Account for the year ended 31st March 2024
4 marks| Dr | A ₹ | B ₹ | Cr | A ₹ | B ₹ |
|---|---|---|---|---|---|
| To Salaries | 96,000 | 60,000 | By Gross Profit b/d | 7,80,000 | 5,71,200 |
| To Rent | 21,600 | 14,400 | |||
| To Electricity | 9,600 | 4,800 | |||
| To Depreciation | 24,000 | 19,200 | |||
| To Selling Expenses | 10,800 | 8,400 | |||
| To Labour Welfare | 18,000 | 12,000 | |||
| To Net Profit | 6,00,000 | 4,52,400 | |||
| 7,80,000 | 5,71,200 | 7,80,000 | 5,71,200 |
Result: gross profit A ₹7,80,000, B ₹5,71,200; net profit A ₹6,00,000, B ₹4,52,400; the business as a whole ₹10,52,400, which agrees with the undivided figures.
Where the 12 marks sit
| # | Component | Marks |
|---|---|---|
| 1 | Bases chosen and apportionment of common expenses | 4 |
| 2 | Departmental Trading Account | 4 |
| 3 | Departmental Profit and Loss Account | 4 |
| Total | 12 |
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