The proprietors of Virat Departmental store wish to ascertain approximately
separate net profits of their two particular departments P and Q for the year ended 31st
March, 2017. It is not possible to take stock on that date. However, normal rates of Gross
Profit (before charging direct expenses) for the department concerned were 40% and
30% on sales respectively. There are six departments in the stores. The following figures
were extracted from the books for the year ending 31st March, 2017:
Department P
(`)
Department Q
(`)
Stock (April 1, 2016)
3,00,000
2,80,000
Sales
14,00,000
12,00,000
Purchases
9,00,000
7,20,000
Direct Expenses
1,83,000
2,84,000
The total indirect expenses of all the six departments for the period were `3,60,000. These
expenses (except one-third which is to be divided equally) are to be charged in
proportion to departmental sales. The total sales of the other departments were
`14,00,000. The Manager of each department is also entitled to a commission of 2 % on
the turnover of his department. Prepare Departmental Trading and Profit& Loss Account in
columnar form for the year ending 31st March,2017 making a stock reserve of 5% for
each department on the estimated value of stock on 31st March,2017.
November 28, 2023
