Dr. Departmental Trading and Profit and Loss Account for the year ended 31st December, 2017 Cr. Particulars Dept A Dept B Total Particulars Dept A Dept B Total () To Opening Stock 40,000 40,000 By Sales 2,00.000 71,000 271,000 To Purchases 2,00,000 20,000 2,20,000 By Goods transferred to B 50,000 To Goods from Dept A 50,000 By Closing Stock 30,000 10.000 40,000 To Wages 10,000 1,000 11,000 To Gross Profit c/d 30,000 10,000 40.000 2,80,000 81,000 3,11,000 2.80,000 81,000 3,11,000 To Selling Expenses (4:1) 12.000 3,000 15,000 By Gross Profit b/d 30,000 10.000 40.000 To Net Profit od 18,000 7,000 25,000 30,000 10,000 40.000 30,000 10.000 40.000 To Provision for Unrealised Profit on Closing Stock (Note 1) 2,000 By Net Profit bld 25,000 To Capital A/c (Net Profit transferred) 23.000 25.000 25,000 Working Note: (1) Goods are transferred to Dept. A at cost plus 25%. It means the unrealised profit is 20% (25/125) on transfer price. Therefore, unrealised profit on closing stock - 20% of 10,000 -2,000 Illustration 16 A & Co has two departments P and Q. Department P sells goods to Department Q at normal selling prices. From the following particulars, prepare Departmental Trading and Profit and Loss Account for the year ended 31.3.2017 and also ascertain the Net Profit to be transferred to Balance Sheet : Department P(x) Department Q () Opening Stock 5,00,000 Purchases 28,00,000 3,00,000 Goods from P 8,00,000 Wages 3,50,000 2,00,000 Traveling Expenses 20,000 1,60,000 Closing Stock at cost to the Department 8,00,000 2,09,000 Sales 30,00.000 20,00,000 Printing and Stationery 30,000 25,000 The following expenses incurred for both the departments were not apportioned between the departments : (a) Salaries 3,30,000; (b) Advertisement expenses 1,20.000; (c) General expenses 5,00,000: (d) Depreciation is to be charged @ 30% on the machinery value of 96,000 The advertisement expenses of the departments are to be apportioned in the turnover ratio. Salaries and depreciation are to be apportioned in the ratio 2 : 1 and 1 : 3 respectively. General expenses are to be apportioned in the ratio 3: 1. c25