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690 Problem 4. The proprietor of a large retail stores wishes to ascertain approximately the net profits of the A, B, C departments separately for
690 Problem 4. The proprietor of a large retail stores wishes to ascertain approximately the net profits of the A, B, C departments separately for the three months ended 31st March, 1992. It is found impracticable actually to take stock on that date, but an adequate system of departmental accounting is in use, and the normal rates of gross profit for the three departments concerned are respectively 40%, 30% and 20% on turnover before charging the direct expenses. The indirect expenses afe charged in proportion to departmental turnover. The following are the figures for the departments : Rs. Stock on 1-1-92 Purchases for the period Sales for the period Direct Expenses for the period Rs. 6,000 7,000 12,000 2,020 B Rs. 7,000 6,500 10,000 1,450 3,000 4,700 6,000 710 The total indirect expenses for the period (including those relating to other depart- ments) were Rs. 4,200 on the total turnover Rs. 84,000. Prepare a statement showing the approximate net profit, making a stock reserve of 10% for each department on the estimated value on 31st March, 1992
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