From the following particulars, prepare a Departmental Trading Account for the year ended 31-03-2022.
Stock on 1st April, 2021:
Department A Rs. 50,000
Department B Rs. 70,000
Purchases during the year:
Department A Rs. 6,00,000
Department B Rs. 5,00,000
Sales:
Department A Rs. 8,00,000
Department B Rs. 7,50,000
Wages and Carriage Rs. 1,55,000
Closing Stock:
Department A Rs. 1,00,000
Department B Rs. 80,000
Apportion the expenses in preparation to the turnover of each department.
Answer (1)
To prepare a Departmental Trading Account for the year ended March 31, 2022, we need to examine the given particulars and calculate the gross profit for Department A and Department B separately. The Trading Account helps us to find out the gross profit or loss by deducting the cost of goods sold from the sales revenue.
Step-by-Step Calculation:
Opening Stock:
Department A: ₹50,000
Department B: ₹70,000
Purchases during the year:
Department A: ₹6,00,000
Department B: ₹5,00,000
Sales:
Department A: ₹8,00,000
Department B: ₹7,50,000
Closing Stock:
Department A: ₹1,00,000
Department B: ₹80,000
Wages and Carriage Expenses: Total expenses are ₹1,55,000.
We are asked to apportion these expenses based on the turnover of each department, which is the sales revenue.
Total Sales = ₹8,00,000 (Dept. A) + ₹7,50,000 (Dept. B) = ₹15,50,000
Proportional expenses for Dept. A = 15 , 50 , 000 8 , 00 , 000 × 1 , 55 , 000 = ₹80 , 000
Proportional expenses for Dept. B = 15 , 50 , 000 7 , 50 , 000 × 1 , 55 , 000 = ₹75 , 000
Calculate Cost of Goods Sold (COGS):
For Department A:
COGS A = Opening Stock + Purchases + Wages and Carriage − Closing Stock COGS A = 50 , 000 + 6 , 00 , 000 + 80 , 000 − 1 , 00 , 000 = 6 , 30 , 000
For Department B:
COGS B = Opening Stock + Purchases + Wages and Carriage − Closing Stock COGS B = 70 , 000 + 5 , 00 , 000 + 75 , 000 − 80 , 000 = 5 , 65 , 000
Gross Profit Calculation:
For Department A:
Gross Profit A = Sales − COGS A = 8 , 00 , 000 − 6 , 30 , 000 = 1 , 70 , 000
For Department B:
Gross Profit B = Sales − COGS B = 7 , 50 , 000 − 5 , 65 , 000 = 1 , 85 , 000
Thus, the Departmental Trading Account for the year ended March 31, 2022, shows a gross profit of ₹1,70,000 for Department A and ₹1,85,000 for Department B.
