Departmental accounts- need logics

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 31^st 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 !