Departmental Accounts
Meaning of Departmental Store:
§ A departmental store is a large retail establishment, having in the same building a
number of departments each confining its activities to one particular product.
TABLE SHOWING ALLOCATION OF EXPENSES:
Expenses Basis of Allocation
Rent, rates and taxes Area occupied by department
Lighting and heating Number of points/areas occupied
Insurance on stock On the basis of stock
Insurance on building Area occupied
Insurance on plant & machinery Value of machinery
Freight, Carriage Inward, Duty, Octroi, Net purchase
Discount received
Advertisement, Salesman’s Commission, Net sales
Discount allowed, Bad Debts, Packing
Carriage Outward
Depreciation, Repairs, Insurance Value of Machinery
Canteen expenses, Labour welfare exp. Number of workers employed
Office expenses, Miscellaneous exp., On some pre-determined base or equally
Printing & stationery exp., Postage & among departments.
telegram, Telephone expenses.
Salaries and wages Direct
Audit fees, Interest on Debenture, Bank Charged to General Profit and Loss
charges, General Manager’s salary Account.
Q-1 Modern Company Ltd. has four departments. A, B, C, D. The expenses for the month of
June, 2017 are as under:
Rent and taxes 2,000
Repairs 1,200
Depreciation on machinery 900
Lighting 200
Freight 1,000
Salesmen’s commission 1,600
Supervision expenses 3,000
Insurance of stock 1,000
Insurance of Machinery 500
Canteen expenses 300
Power 1,500
Other particulars are as follows:
Particular A B C D
Area Occupied 150 110 90 50
No. of employees 24 16 12 8
Purchases 40,000 30,000 20,000 10,000
Sales 60,000 50,000 30,000 20,000
Value of Machinery 24,000 18,000 12,000 6,000
Value of stock 15,000 9,000 6,000 -
Actual Power 600 450 300 150
From the above information, prepare a statement showing the apportionment of expenses.
Q-2 A department store has four departments. Particular of their expenses are given below.
Show the apportionment of these expenses on some reasonable bases:
Rent and Taxes 5,000
Lighting 1,200
Insurance Premium 2,000
Depreciation 10,000
Canteen Expenses 4,000
Carriage Inward 6,000
Miscellaneous Expenses 8,000
Salesmen’s Commission 10,000
Other particulars are as follows:
Particulars A B C D
Area Occupied 2,000 3,000 3,000 2,000
No. of employees 16 10 8 7
Purchases 16,000 20,000 24,000 20,000
Sales 30,000 60,000 15,000 45,000
Value of Assets 60,000 80,000 1,00,000 10,000
Lighting points 15 15 20 10
Q-3 Shree Mehmood and Omprakash carry on their business as merchants in three
departments, viz. A, B, C. During a trading period, the requisite figures were as follows:
Particulars A B C
Opening Stock 5,000 9,000 3,000
Purchases 45,400 18,000 7,000
Purchase Return 400 - -
Sales 60,000 20,400 10,100
Sales Returns - 400 100
Closing stock 12,000 14,000 5,000
The joint expenses for the trading period which are to be charged to each department were as
follows:
Rent 2,500
Sundry Expenses 1,800
Salary 7,500
Carriage Inward 3,500
Lighting 1,200
Advertisement 7,200
Insurance Premium of Stock 930
The following information is available for allocation:
A B C
Area occupied 150 75 25
Light Point 15 6 3
Salary 4,000 2,000 1,500
Sundry expenses are to be allocated equally and insurance premium of stock is to be allocated
on the basis of closing stock.
Q-4 Rajdeep Corporation runs a departmental store having two departments: Hosiery and
Readymade clothes. The following is the Trial Balance of the stores as on 31-3-2022
Trial Balance
Particulars Debit Rs. Credit Rs.
Opening stock: Hosiery 35,000 -
Readymade clothes 48,000 -
Purchases: Hosiery 2,00,000 -
Readymade clothes 1,60,000 -
Sales: Hosiery - 3,00,000
Readymade clothes - 2,25,000
Carriage Inward 9,000 -
Rent and Taxes 38,000 -
Salary 24,000 -
Wages 54,000 -
Furniture and Fittings 15,000 -
Plant and Machinery 90,000 -
Sundry Expenses 21,000 -
Lighting 6,400 -
Sundry Debtors 52,000 -
Sundry Creditors - 1,25,000
Capital Account - 2,20,000
Drawings 20,000 -
Discount allowed 8,400 -
Discount received - 2,250
Advertisement 13,300 -
Provident Fund Contribution 4,800 -
Bank Balance 70,700 -
Cash on Hand 2,650 -
8,72,250 8,72,250
Other information is as follows:
(1) Closing stock: Hosiery Rs. 85,000
Readymade clothes Rs. 60,000
(2) Provide depreciation on Furniture and Plant and Machinery at 10% per annum.
(3) The following information is available for apportionment of expenses:
Hosiery Readymade Clothes
Area occupied 240 140
Light points 18 14
Value of Furniture 9,000 6,000
Value of Plant and Machinery 60,000 30,000
Ratio of Sundry Expenses 4 3
Actual Salary 15,000 9,000
From the above information you are required to prepare Departmental Trading and Profit and
Loss Account for the year ending on 31-3-2022 and a Balance Sheet as on that date.
Q-5 Punita and Sunita run Bhagyoday Departmental stores in partnership, having two
departments A and B. The following is the Trial Balance of the stores as on 31-3- 2021.
Trial Balance
Debit Balance Rs. Credit Balance Rs.
Opening Stock: A 28,000 Sales: A 2,40,000
B 35,000 B 1,92,000
Purchases: A 1,20,000 Creditors 46,000
B 80,000 Loan 26,900
Salary: A 11,000 Capital: Punita 90,000
B 23,000 Sunita 70,000
Lighting 1,800 Interest on investments 2,000
Advertisement 18,000
9% investments 30,000
Building 1,20,000
Building Insurance Premium 900
Rent and taxes 16,200
Audit fees 2,100
Debtors 36,000
Bad debt 2,700
Carriage Outward 9,000
Carriage inward 5,500
Salary General 41,900
Furniture 35,000
Bank Balance 23,200
Bank Interest 5,600
Drawings: Punita 14,000
Sunita 8,000
6,66,900 6,66,900
Other additional information:
(1) Closing Stock: A Rs. 28,000; B Rs. 32,000.
(2) Depreciation on Furniture is to be provided at 10%, which is to be distributed in the
proportion of 4:3 respectively.
(3) Prepaid insurance premium amounted to Rs. 300
(4) Interest is to be calculated at 10% on capitals and drawings.
(5) Punita and Sunita were sharing profits and losses in the proportions of 4:3
respectively.
(6) Space occupied by the two departments was 400 sq. ft and 200 sq. ft respectively.
From the information given above, you are required to prepare Departmental Trading
and Profit and Loss Accounts and General Profit and Loss Account for the year ending 31-3-
2021 and a balance sheet as on that date.
Q-6 Shree Raman Bhai Patel runs a retail shop, having two departments: Television
and Radio. The Trial Balance extracted from the books on 31-3-2021 was as under:
Trial Balance
Particulars Debit Credit
Capital (1-4-2020) - 1,00,000
Drawings 20,000 -
Stock (1-4-2020) Television 90,000 -
Radio 42,000 -
Sales: Television - 5,88,000
Radio - 2,92,000
Purchases: Television 4,50,000 -
Radio 2,30,000 -
Salary 25,200 -
Advertisement 17,800 -
Rent and Taxes 6,300 -
Commission 21,200 -
Sundry Expenses 10,200 -
Furniture and Fixtures 24,600 -
Debtors 33,600 -
6% Government Loan 20,000 -
Sundry Creditors - 17,400
Interest - 800
Bad Debts Reserve - 1,800
Cash on hand 9,100 -
10,00,000 10,00,000
From the following particulars, prepare Departmental Trading and Profit and Loss Account
for the year ended 31-3-2021 and a Balance Sheet as on the date:
(1) Closing stock on 31-3-2021: Television Rs. 60,000; Radio Rs. 48,000.
(2) Write off Rs. 2,400 as bad debts from debtors and increase bad debts reserve to 10%
on debtors.
(3) Expenses outstanding on 31-3-2021 were: Advertisement 2600; Salaries 2,400;
Commission 3,400.
(4) Provide Depreciation on Furniture and fixtures at 10%.
(5) Revenue items are to be allocated between Radio and Television departments in the
ratio of 2:1.
Q-7 From the following Trial Balance, you are required to prepare Departmental
Trading and Profit Loss Account and balance Sheet as on 31-3-2017.
Trial Balance
Particulars Debit Credit
Stock (1-4-2016) Department A 17,000 -
Department B 14,500 -
Purchases: Department A 35,400 -
Department B 30,200 -
Sales: Department A - 60,800
Department B - 51,250
Wages Department A 8,200 -
Department B 2,700 -
Rent, rates and Insurance 9,390 -
Sundry Expenses 3,600 -
Salary 3,000 -
lighting 2,100 -
Discount allowed 2,220 -
Discount received - 650
Advertisement 3,680 -
Carriage Inward 2,340 -
Furniture and Fittings 3,000 -
Plant and Machinery 21,000 -
Sundry Debtors 6,060 -
Sundry Creditors - 18,600
A’s Capital Account - 47,660
A’s Drawings 4,500 -
Cash on hand 170 -
Bank balance 9,900 -
1,78,960 1,78,960
You are requested to take the following into consideration:
(1) Rent, taxes and insurance, Sundry expenses, Lighting, Salary and Carriage
inwards are to be distributed between the two departments in the proportion of
A 2/3 and B 1/3.
(2) Advertisement expenses are to be allocated equally.
(3) Discount allowed and received are to be allocated on the basis of departmental
sales and purchases.
(4) Depreciate Furniture and Fittings as well as Plant and Machinery at 10% p.a.
and allocate it to two departments as ¾ and ¼.
(5) Rs. 500 charged by Dept. B to Dept. A for services rendered is included in
wages.
(6) Stock on 31-3-2017 was as follows:
Department A Rs. 16,740, Department B Rs. 12,050.
(7) There have been no changes in the fixed assets during the year.
Q-8 Shri Vipin Nanavati, proprietor of Shri Abhilasha Departmental Stores supplies you the
following information for the year ending on 31-3-2017 relating to his two departments:
Furniture and Cloth. You are required to prepare his columnar Trading and Profit and Loss
Account for the year ending on 31-3-2017 on the basis of the following information:
Particulars Furniture Cloth Total
Opening stock 12,000 16,000 28,000
Purchases 94,000 1,26,000 2,20,000
Sales 1,87,000 2,29,000 4,16,000
Goods supplied to Cloth department 15,000 - 15,000
Goods supplied to Furniture department - 18,000 18,000
Purchase Returns 4,000 6,000 10,000
Sales returns 12,000 4,000 16,000
Closing Stock 16,000 22,000 38,000
Wages - - 21,000
Carriage Inward - - 9,100
Discount received - -- 4,200
Carriage Outward - - 3,200
Salary 24,000 32,000 56,000
General Salary - - 40,000
Rent and Taxes - - 12,000
Discount allowed - - 3,200
Sundry Expenses - - 4,800
(1) The two departments have occupied space in the proportion of 3:1.
(2) Machinery worth Rs. 90,000 is used in business, on which depreciation is to be
provided at 10% and the same is to be allocated between the two departments in the
ratio of 3:2.
(3) Other expenses are to be allocated on some reasonable bases.
Q-10 Following particulars are taken from the books of Swadeshi Stores Limited:
Purchases 2,00,000 3,00,000 8,00,000
Purchases Returns 20,000 10,000 30,000
Sales 6,10,000 12,20,000 18,30,000
Sales Returns 10,000 20,000 30,000
Wages 40,000 60,000 80,000
Stock on 1-4-2016 50,000 70,000 10,000
Stock on 31-3-2017 80,000 50,000 40,000
Goods transferred from Department A:
To Department B 10,000
To. Department C. 20,000
Goods transferred from Department B:
To Department A 5,000
To Department C 10,000
Goods transferred from Department C:
To Department A 7,000
To Department B 9,000
Following expenses are to be allocated equally: Telephone charges Rs. 3,000; Insurance
Premium RS. 6,000; Office expenses Rs. 9,000; Rent Rs. 24,000 (to be divided in proportion
of space, i.e., Dept. A 1/4; Dept. B ¼; and Dept. C ½)
Q – 11 The following is the Trial Balance of Reliance Petroleum as on 31-3-2017. You are
required to prepare Departmental Trading, Profit and Loss Account, General Profit and Loss
Account and a Balance Sheet as at 31-3-2017:
Particulars Debit Credit
Opening Stock: PTA Dept. 1,20,000 -
POY Dept. 1,05,000 -
Purchases: PTA Dept. 2,50,000
POY Dept. 2,00,000
Sales: PTA Dept. 5,00,000
POY Dept. 2,50,000
Wages: PTA Dept. 69,000
POY Dept. 20,000
Salary 21,000
Lighting 15,000
Bad Debts 15,000
Discount 12,000 18,000
Advertisement 9,000
Debtors- Creditors 30,000 50,000
Land & Building 80,000
Furniture 40,000
Legal charges 5,000
Manager’s Salary 10,000
Capital - 2,03,000
Bank balance 20,000
Additional Information:
(1) Closing Stock: PTA Dept. Rs. 80,000
POY Dept. Rs. 60,000
(2) Salary and lighting are to be allocated between PTA and POY department in the
ration of 2:1.
(3) Provide depreciation on Land-Building at 10% and Furniture at 15%, which is to be
allocated between the two departments in the ratio of 1:1.
Q-12 From the following trial balance, you are required to prepare departmental Trading and
Profit & Loss account, General Profit & Loss Account and Balance Sheet as on 31-3-2019:
Particulars Debit Credit
Opening Stock: A 1,12,500
B 1,50,000
Purchase: A 4,50,000
B 3,00,000
Purchase Return: A 75,000
B 37,500
Sales: A 9,37,500
B 5,62,500
Sales Return: A 75,000
B 37,500
Creditors 70,000
Bills Payable 58,500
Land & Building 10,00,000
Furniture 5,00,000
Vehicles 1,87,500
Debtors 1,12,500
Bills Receivable 1,20,000
Cash on hand and Bank overdraft 2,00,000
Carriage Inward 42,500
Carriage Outward 18,500
Salary 2,25,000
Lighting 75,000
Advertisement expenses 1,05,000
Insurance of material 20,000
10% Investments (1-1-2019) 25,000
Legal charges 7,500
Capital 20,62,500
Sundry expenses 75,000
38,38,500 38,38,500
Other Information:
(1) Provide depreciation on Furniture at 10%, allocated between departments in 3;2 and
provide depreciation on Land & Building at 5%.
(2) Closing Stock: Department A – 1,25,000
Department B – 1,25,000
(3) The following information is available for distribution of expenses:
Particulars Department A Department B
Area occupied 375 225
Lighting points 45 30
Ratio of sundry expenses 3 3
Salary 15 12
Average stock 1,25,000 2,50,000
(4) Prepaid insurance is Rs. 2,000.
