X Ltd. Has three departments IJK. The following information is provided for the year ended 31st March, 2018. Particulars I J K Opening Stock 5,000 8,000 19,000 Opening reserves for unrealized profits - 2,000 3,000 Material consumed 16,000 20,000 - Direct Labour 9,000 10,000 - Closing Stock 5,000 20,000 5,000 Sales - - 80,000 Area occupied (sq.mtr.) 2,500 1,500 1,000 No. of Employees 30 20 10 Stocks of each department are valued at costs to the department concerned. Stocks of “I” are transferred to “J” at cost plus 20% and stocks of “I” transferred to “K” at a gross profit of 20% sales. Other common expenses are salaries and staff welfare Rs. 18,000. Rent Rs. 6,000. Prepare Departmental Trading, Profit and Loss Account for the year ending 31st March, 2018.
Answers
Answer:
Explanation:
Working Notes
Calculation of unrealized profit on closing stock
Stock reserve of J department
Cost = 30,000
Transfer from I department = 30,000
Total = 60,000
Stock of J department = 20,000
Proportion of stock of I department = 30,000× 20,000 / 60,000 = 10,000 Stock reserve = 10,000 × 20/ 120 = 1,667
Stock reserve of K department
Stock transferred from J department = 5,000
Less:Profit (stock reserve) = 5,000 × 20% (1,000)
Cost to J department= 4,000
Profit & loss Account
particulars I J K Total
To opening 5000 8000 19000 32000
To material consumed 16000 20000 36000
To direct labour 9000 10000 19000
to departmental transfer 30000 60000 90000
To gross profit 5000 12000 85000 23000
35000 80000 85000 200000
To salaries 9000 6000 3000 18000
To rent 3000 1800 1200 6000
To net profit 4200 1800 6000
6000 30000 12000
To net loss 7000
To stock Reserve 3000
To balance Transferred 1000
11000
Particulars I J k total
By sales 80000 80000
By inter departmental transfer 30000 60000 90000
By transfer 5000 20000 5000 30000
35000 80000 85000 200000
By Gross profit 5000 12000 6000 23000
By Net loss 7000 7000
By stock reserve 30000
By net profit 5000
6000
11000