Trading Account
Particulars X (Rs.) Y (Rs.) Particulars X (Rs.) Y (Rs.)
To, Opening Stock By, Sales A/c
To, Purchases By, Inter-Department 10000 -
To, Inter Department Transfer
Transfers - 10000 By, Closing Stock,
To, Direct Expenses
Dr. Cr.
Department ‘B’ a/c Dr.
To, Department ‘A’
Problems
Problem – 1:
From the following information, prepare the departmental trading and Profit & Loss A/c for the
year ending 31-12-2011:
Particulars Dept. X Dept. Y Total
` ` `
Opening stock 6,000 5,000 11,000
Purchases 62,000 31,000 93,000
Sales 1,01,500 76,000 1,77,500
Wages 4,000 7,500 11,500
Returns outwards 2,000 1,000 3,000
Returns inwards 1,500 1,000 2,500
Salary to office staff - - 25,000
Rent and taxes - - 4,500
Discount allowed 3,500
Discount earned - - 2,500
Carriage outwards - - 1,400
General Expenses - - 4,200
Other Information:
a) Office staff appointed : department. X=8 persons and department Y= 12 persons
b) Area occupied: department X = 400sq.ft. and department Y= 800sq.ft
c) Depreciation, on machinery worth ` 50,000 at 10% and on furniture worth ` 15,000 at 20%, to be
distributed between the departments equally.
d) Stock of goods on 31-12-2005: department X = ` 8,000 and department Y = ` 4,000
e) Inter departmental transfers: department X to Y `10,000, which is not included in the above
information.
f) Exclude the inter – departmental transfers for calculation of ratios
Solution:
Apportionment of Expenditures between Department X & Y
Sl.No Expenditure Basis Dept.-X Dept.-Y
1. Salary to Office Staff No. of Office staff 25000*(2/5) 25000*(3/5)
Appointed (8:12)(2:3) =10000 =15000
2. Rent and Taxes Area Occupied 4500*(1/3) 4500*(2/3)
(400:800 = 1:2) =1500 =3000
3. Discount Allowed Net Sales Ratio (4:3) 3500*(4/7) 3500 * (3/7)
= 2000 =1500
4. Discount Earned Net Purchase Ratio (2:1) 2500 * (2/3) 2500 *(1/3)
=1667 =833
5. Carriage Outwards Net Sales Ratio (4:3) 1400 * (4/7) 1400 * (3/7)
=800 =600
6. General Expenses Net Sales Ratio (4:3) 4200 * (4/7) 4200 * (3/7)
= 2400 = 1800
Working Note: Calculation of Net Sales Ratio
Net Sales = Sales – Return Inwards
X’ Sales = 101500 – 1500 = 100000
Y’s Sales = 76000-1000 = 75000
Ratio = 100000: 75000 = 4:3
Calculation of Net Purchases Ratio
Net Purchases = Purchases – Return Outwards
X’s Purchases = 62000 – 2000 = 60000
Y’s Purchases = 31000 – 1000 = 30000
Ratio = 60000:30000 = 2:1
Departmental Trading and Profit and Loss Account for the year ending 31.12.2011
Dr. Cr.
Particulars Dept. X Dept. Y Total Particulars Dept. X Dept. Y Total
(Rs.) (Rs.) (Rs.) (Rs.)
To, Opening Stock 6000 5000 11000 By, Sales less Returns
To, Purchases (-)Return inwards
outwards X = 101500 – 1500 100000 75000 175000
X= 62000 – 2000 60000 30000 90000 Y = 76000 – 1000
Y =31000 – 1000 By, Inter Department 10000 - 10000
To, Inter Department Transfer
Transfer - 10000 10000
To, Wages 4000 7500 11500 By, Closing Stock 8000 4000 12000
To, Gross Profit c/d 48000 26500 74500
118000 79000 197000 118000 79000 197000
To, Salary to Office Staff 10000 15000 25000 By, Gross Profit b/d 48000 26500 74500
To, Rent and Taxes 1500 3000 4500 By, Discount earned 1667 833 2500
To, Discount Allowed 2000 1500 3500
To, Carriage Outwards 800 600 1400
To, General Expenses 2400 1800 4200
To, Depreciation on
Machinery 2500 2500 5000
(50000*10% = 5000)(1:1)
To, Depreciation on
Furniture 1500 1500 3000
(15000*20% = 3000)(1:1)
To, Net Profit c/d (transfer 28967 1433 30400
to General Profit & Loss A/c
49667 27333 77000 49667 27333 77000
