FGH Ltd. Has three departments I, J and K. The following information is provided for the year ended 31.03.2011:
|
|
I |
J |
K |
|
Opening Stock |
5,000 |
8,000 |
19,000 |
|
Opening reserve for unrealized profit |
- |
2,000 |
3,000 |
|
Materials 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 J are transferred to K at a gross profit of 20% on sales. Other common expenses are salaries and staff welfare of Rs.18,000, rent Rs.6,000
Prepare Departmental Trading, profit and Loss account for the year ending 31.03.2011.
Solution :
FGH Ltd.
Departmental Trading and Profit and Loss Account
For the year ended 31st March, 2011
|
Particulars |
I |
J |
K |
Total |
Particulars |
I |
J |
K |
T |
|
To Opening Stock |
5,000 |
8,000 |
19,000 |
32,000 |
By Sales |
|
|
80,000 |
80,000 |
|
To Material Consumed |
16,000 |
20,000 |
|
36,000 |
By Inter-departmental transfer |
30,000 |
60,000 |
|
90,000 |
|
To Direct labour |
9,000 |
10,000 |
|
19,000 |
By closing stock |
5,000 |
20,000 |
5,000 |
30,000 |
|
To Inter-departmental transfer |
|
30,000 |
60,000 |
90,000 |
|
|
|
|
|
|
To Gross Profit |
5,000 |
12,000 |
6,000 |
23,000 |
|
|
|
|
|
|
|
35,000 |
80,000 |
85,000 |
200,000 |
|
35,000 |
80,000 |
85,000 |
200,000 |
|
To Salaries |
9,000 |
6,000 |
3,000 |
18,000 |
By Gross profit b/d |
5,000 |
12,000 |
6,000 |
23,000 |
|
To Rent |
3,000 |
1,800 |
1,200 |
6,000 |
By net loss |
7,000 |
|
|
7,000 |
|
To net profit |
|
4,200 |
1,800 |
6,000 |
|
|
|
|
|
|
|
12,000 |
12,000 |
6,000 |
30,000 |
|
12,000 |
12,000 |
6,000 |
30,000 |
|
To net loss(I) |
|
|
|
7,000 |
By stock reserve b/d |
|
|
|
5,000 |
|
To Stock reserve(J+K) |
|
|
|
3,000 |
By net profit(J+K) |
|
|
|
6,000 |
|
To Balance transferred to profit and loss a/c |
|
|
|
1,000 |
|
|
|
|
|
|
|
|
|
|
11,000 |
|
|
|
|
11,000 |
Working Note:
Calculation of unrealized profit on closing stock
|
Stock reserve of dept J: |
|
|
Cost |
30,000 |
|
Transfer from Dept I |
30,000 |
|
Total |
60,000 |
|
Stock of Dept J |
20,000 |
Proportion of stock of Dept I = 20,000* 30,000/60,000 = 10,000
Stock Reserve = 10,000*20/120 = 1,667
Stock reserve of dept K:
|
Stock transferred from Dept J |
5,000 |
|
Less: profit (Stock Reserve) 5,000*20% |
1,000 |
|
Cost to Dept J |
4,000 |
Proportion of stock of Dept I = 4,000*30,000/60,000 = 2,000
Stock reserve = 2,000*20/120 = 333
Total stock reserve = 1,000 + 333 = 1,333
In this problem my question is about logics behind calculation of inter-departmental transfer and stock reserve calculation. Please tell me how the above highlighted figures are arrived at along with logic behind it.
Thank You !
CAclubindia
