Subject: Accounting for Spcl.Trans.

Illustration Please prepare a Departmental Trading and Profit and Loss Account & General Profit and Loss Account for the year ended 31-12-2022 of M/s Gracey & Company where Department A sells goods to Department B on Normal selling price.

Particulars Dept. A. Dept. B

Opening Stocks 175,000

Purchases 4,025,000 350,000

Inter Transfer of Goods 1,225,000

Wages 75,000 280,000

Electricity Expenses 17,500 245,000

Clossing Stocks ( at cost) 875,000 315,000

Sales 4,025,000 2,625,000

Office Expenses 35,000 28,000

Combined Expenses for Both Department

Salaries (2:1 ratio) 472,500

Printing and Stationery Expenses (3:1 ratio) 157,500

Advertisement Expenses (Sales Ratio) 1,400.000

Depreciation (1:3 ratio) 21,000

M/s Gracey & Company

Departmental Trading and Profit and Loss Account

For the year ended 31-12-2022

Solution:

Particulars Dept. A. Dept. B Particulars Dept. A. Dept. B

To Opening Stocks 175,000 0 By Sales 4,025,000 2,625,000

To Purchases 4,025,000 350,000 By Transfer B 1,225,000 0

To Transfer from A 1,225,000 By Closing Stocks 875.000 315,000

To Wages 280,000

To Gross Profit c/d 175,000 1,085,000

1,750.000

Total 6,125,000 2,940,000 Total 6,125,000 2,940,000

General Profit and Loss Account

For the year ended 31-12-2022

Particulars Dept. A Particulars Dept. B

To Stock Reserve (Dept. B) 81,667.00 By Departmental net profit b/d

To Net Pkrofit c/d 376,833 Dept. A 411,757

Dept. B 46,743

458,500

Total 458,500 Total -------- 458,500

To Electricity Expenses 17,500 245,000 By Gross Profit b/d 1,750,000 1,085,000

To Office Expenses 35,000 28,000

To Salaries (2:1 ratio) 315,000 157,500

To Printing and Stationery Expenses (3:1 ratio) 118,125 39,375

To Advertisement Expenses

(Sales Ratio 40:25:26:25) 847,368 552,632

To Depreciation (1:3 ratio) 5,250 15,750

To Net Profit 411,757 46,743

Total 1,750.000 1,085,000 Total 1,750.000 1,085,000

Hi there, i want to know the explanation of the solution of the totals of the illustration problem because i have a reporting about the accounting for special transactions so i want to know every little details on how they came up in the solutions of all totals. thank you so much god bless.