Question 5 (a)

Departmental Trading Account with a common gross profit percentage

12 marks

Time to write: About 24 minutes
Topic: Departmental accounts
Notes: Crux notes

Question

Question 5 (a) · 12 marks

Ramesh Ltd. has three departments: A, B, and C. These departments supply the information below for the year ended 31st March 2025:

Particulars	Department A	Department B	Department C
Purchases (Units)	25,000	50,000	75,000
Sales (Units)	26,000	49,000	76,500
Selling price per unit (₹)	21	22	24
Stock at the end	2,000	3,000	3,500
Total purchases during the year were	₹ 23,97,500

You are required to prepare Ramesh Ltd.'s departmental trading account, assuming the percentage of gross profit on turnover to be the same in each case.

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

24 minfor 12 marks

Read from the question

assuming the percentage of gross profit…The paper fixes this: use it as given, and say so in your answer.
prepare Ramesh Ltd.'s departmental trading accountProper formats (heading, date, both sides): post the plain items, then each adjustment, and balance last.

What the paper leaves open

Each department's purchase cost per unit is its selling price less the common gross profit percentage: total purchases divided by the purchases valued at selling price gives the common cost ratio.
The opening stock in units is derived (closing stock plus units sold less units purchased) and valued at the same cost per unit, as the paper gives no other basis.

Write it in this order

Read the data; tick every adjustment as you plan it 2 min
1 Common cost ratio and cost per unit 4 marks 7 min
2 Opening stock units and values 3 marks 5 min
3 Departmental Trading Account 5 marks 8 min
Check: every adjustment used, both sides agree, dates in 2 min

123

Final answer

Check your own figures against these.

Gross profit A: ₹1,63,800, B ₹3,23,400, C ₹5,50,800, each 30% of its sales. Purchases add back to ₹23,97,500

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 Account with a column for each department; under this method the trading and profit and loss account is prepared to know each department's result.
Common gross profit percentage. If the percentage of gross profit on turnover is the same, each department's cost is the same fraction of its selling price. Purchases valued at selling price: A 25,000 × 21 = 5,25,000; B 50,000 × 22 = 11,00,000; C 75,000 × 24 = 18,00,000; total 34,25,000. Cost ratio = 23,97,500 ÷ 34,25,000 = 70%, so the gross profit is 30% of sales.
Cost per unit: A ₹14.70, B ₹15.40, C ₹16.80. Opening stock in units = closing + sold − purchased: A 3,000; B 2,000; C 5,000, valued at the same cost per unit.

Departmental Trading Account for the year ended 31st March 2025

5 marks

Dr	A ₹	B ₹	C ₹	Cr	A ₹	B ₹	C ₹
To Opening Stock	44,100	30,800	84,000	By Sales	5,46,000	10,78,000	18,36,000
To Purchases	3,67,500	7,70,000	12,60,000	By Closing Stock	29,400	46,200	58,800
To Gross Profit	1,63,800	3,23,400	5,50,800
	5,75,400	11,24,200	18,94,800		5,75,400	11,24,200	18,94,800

Units: sales A 26,000 × 21, B 49,000 × 22, C 76,500 × 24; closing stock A 2,000, B 3,000, C 3,500 at cost per unit.

Result: gross profit A ₹1,63,800, B ₹3,23,400, C ₹5,50,800, each 30% of its sales. Purchases add back to ₹23,97,500.

Where the 12 marks sit

#	Component	Marks
1	Common cost ratio and cost per unit	4
2	Opening stock units and values	3
3	Departmental Trading Account	5
	Total	12

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