PROF.

BHAMBWANI’S

RELIABLE CLASSES
I.P.C.C. Accounts – (Gr. II)
Departmental Accounts
Sr No Lecture No Content of lecture Duration In Minutes
1 1 Theory 20
2 2 Theory 22
3 3 Problem 44
4 4 Problem 57
5 5 Problem 39
6 6 Problem 40
7 7 Problem 25
8 8 Problem 58
9 9 Problem 48
10 10 Problem 110
11 11 Problem 60
12 12 Problem 45
13 13 Problem 49
Total 617=10 hrs and 17 Min.

LEC 1: (20 Minutes)

Theory

LEC 2: (22 Minutes)

Theory
LEC 3: (44 Minutes)
From the following Trial Balance, prepare the Departmental Trading and Profit and Loss
accounts for the year ending December 31, 1980 and Balance Sheet on that date in the
books on that date in the books of Mr. P.
Dr. Cr.
Rs. Rs.
Stock A Dept. 5,400
B Dept. 4,900
Purchases A Dept. 9,800
B Dept. 7,350
Sales A Dept. 16,900
B Dept. 13,520
Wages A Dept. 1,340
B Dept. 240
Rent 1,870
Salaries 1,320
Lighting and Heating 420
Discount Allowed 441
Discount Received 133
Advertising 738
Carriage Inwards 469
Furniture and Fittings 600
Plant and Machinery 4,200
Sundry Debtors 1,820
Sundry Creditors 3,737
Capital 9,530
Drawings 900
Cash in hand 32
Cash at Bank 1,980
------ ------
43,820 43,820
====== ======
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 The following Information is also provided:
(a) Rent and Lighting and Heating are to be allocated between Factory and Office in
the ratio of 3:2.
(b) Rent, Lighting and Heating, Salaries and Depreciation are to be apportioned to A
and B Depts. As 2:1
(c) Other Expenses and income are to be apportioned to A and B Depts. on a
suitable basis.
(d) The following adjustments are to be made:
Rent Prepaid Rs.370; Lighting and heating outstanding Rs.180; and
Depreciation on Furniture and Fittings at 10% p.a.
(e) The stock on December 31, 1990; A Dept. Rs.2,748: B Dept. Rs.2,401.

LEC 4: (57 Minutes)

Messrs D, B and R carried on a business of Drapers and Tailors in Delhi; D was
incharge of Department “A” dealing on cloth, B of department “B” for selling garments
and R of Department “C” the tailoring section. It had been agreed that each of the
three partners would receive 75% of the profits disclosed by the accounts of the
department of which he was in charge and the balance of the profits would be shared in
the proportion: D 1/2, B 1/4 and R 1/4. The following is the Trading and Profit and Loss
Account of the firm for the six months ended March 31, 1999.
Trading and Profit and Loss Account
Rs. Rs. Rs. Rs.
To Opening Stock: By Sales:
Cloth (A) 37,890 Cloth (A) 1,80,000
Ready-made Gar- Ready-made
ment (B) 24,000 Garments (B) 1,30,000
Tailoring Jobs (C) 20,000 81,890 Tailoring
To Purchase: Jobs (c) 90,000 4,00,000
Cloth (A) 1,40,700 By Discounting received 800
Ready-made Gar- By Closing Stock;
ment (B) 80,600 By Cloth (A) 45,100
Tailoring Goods (C)44,400 2,65,700 Ready-made Gar-
To Salaries and Wages 48,000 ments (B) 22,300
To Advertising 2,400 Tailoring Jobs (C) 21,600 89,000
To Rent 10,800 [including Rs.5,700
To Discount allowed 1,200 for goods transferred
To Sundry Exp. 12,000 from department (A)]
To Depreciation on Fur-
niture and Fittings 750
Net Profit 67,060 _________
4,89,800 4,89,800
After consideration of the following, prepare Departmental Accounts and Profit and Loss
Appropriation Account:
i) Cloth of the value of Rs.10,700 and other goods of the value of Rs.600 were
transferred at selling price by Departments A and B respectively to Department
C.
ii) Cloth and garments are sold in the show-room. Tailoring work is carried out in
the workshop.
iii) The details of salaries and wages were as follows:
(a) General Office 50%, show-room 25% and 25% for workshop, which is for
tailoring.
(b) Allocate General Office Expenses, in the proportion of 3:2:1 among the
Departments A, B, C.
(c) Distribute show-room expenses in the proportion of 1:2 between
Departments A and B.
iv) The workshop rent is Rs.1,000 per month. The rent of the General Office and
Show room is to be divided equally between Departments A and B.
v) Depreciation charges are to be allocated equally amongst the three
Departments.

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 vi) All other expenses are to be credited to the three Departments as follows: A
Rs.400; B Rs.250 C Rs.150.
vii)The opening stock of Department C does not include any goods transferred from
Department A. (M-1)

LEC 5: (39 Minutes)

Fruit Juice Ltd. Mumbai has factories at Ratnagiri (alphonso mango pulp) and Nagpur
(orange juice)
During the year ended 31st March, 1999, the following location wise revenue
statements were furnished by the two factories (from which the total column has been
complied):
Ratnagiri Nagpur Total
Rs. Rs. Rs.
Opening stock:
Work in Process 24,000 12,000 36,000
Finished goods 8,000 2,000 10,000
32,000 14,000 46,000
Raw material consumption 25,00,000 10,00,000 35,00,000
Employee cost 5,00,000 6,00,000 11,00,000
Power and fuel 1,00,000 50,000 1,50,000
Consumable stores 15,000 7,000 22,000
Rates and taxes 14,000 9,000 23,000
Repairs to factory:
Building 4,000 5,000 9,000
Machinery 80,000 50,000 1,30,000
Other assets 3,000 1,000 4,000
Other expenses 65,000 55,000 1,20,000
Depreciation 1,00,000 90,000 1,90,000
34,13,000 18,81,000 52,94,000
Less: Closing stock
Work in process 28,000 13,000 41,000
Finished goods 5,000 8,000 13,000
Rs. 33,000 21,000 54,000
Cost of goods transferred to
marketing division Rs. 33,80,000 18,60,000 52,40,000
The marketing division furnishes you with the following information of its productwise
revenue statement for the year ended 31st March, 1999 (from which the total column
has been compiled):
Mango pulp Orange juice Total
Rs. Rs. Rs.
Opening stock: 12,000 5,000 17,000
Receipt during the year out of:
Last year’s dispatch from factory 10,000 5,000 15,000
Current year’s dispatch from factory 33,65,000 18,50,000 52,15,000
33,75,000 18,55,000 52,30,000
Transport “in” cost from factory 50,000 60,000 1,10,000
34,37,000 19,20,000 53,57,000
Less: closing stock 7,000 10,000 17,000
34,30,000 19,10,000 53,40,000
Sales commission 5,00,000 2,50,000 7,50,000
Sales tax 4,00,000 1,25,000 5,25,000
Profit 6,70,000 2,15,000 8,85,000
Sales 50,00,000 25,00,000 75,00,000

You are asked to prepare sectional and consolidated revenue statement for the year
ended 31st March, 1999 for consideration of the board of directors and presentation to
the members of Fruit Juice Ltd. Also work out the percentage of net profit to sales.
Show your working, if any. (SC CA I-106)

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LEC 6: (40 Minutes)
X Ltd. has two departments, A and B. From the following particulars prepare the
consolidated Trading Account and Departmental Trading account for the year ending
31st December, 1998:
A B
Rs. Rs.
Opening Stock (at cost) 20,000 12,000
Purchases 92,000 68,000
Sales 1,40,000 1,12,000
Wages 12,000 8,000
Carriage 2,000 2,000
Closing Stock:
(i) Purchased goods 4,500 6,000
(ii)Finished goods 24,000 14,000
Purchased goods transferred:
By B to A 10,000
By A to B 8,000
Finished goods transferred:
By A to B 35,000
By B to A 40,000
Return of finished goods:
By A to B 10,000
By B to A 7,000
You are informed that purchased goods have been transferred mutually at their
respective departmental purchase cost and finished goods at departmental market
price and that 20% of the finished stock (closing) at each department represented
finished goods received from the other department. (M-6)

LEC 7: (25 Minutes)

Booming Limited has three departments. They are Alpha, Beta and Gamma. The profit
of these departments are Rs.30,000, Rs.40,000 and Rs.17,400 respectively. (Before
charging manager’s commission) and unrealised profit on stock transfers.
Department Alpha transfers its goods @ 20% profit on cost to other departments while
Beta transfers its goods @ 10% profit on cost. However, department Gamma transfers
its goods at cost to other departments. However, respective Deptt. s original goods are
only transferred.
On scrutiny of records you find,
i)Purchases made for Alpha Deptt. Rs.10,000 has been debited in Beta Deptt. Account.
i) Goods sent on ‘Sale or return basis’ by Beta Deptt. @ 20% have been recorded
as regular Sale at Rs.8,400.
ii) General expenses amounting to Rs.2,100 have been excessively charged in
Gamma Deptt. Instead of Beta Deptt.
iii) The following transfers were made:
Deptt. Alpha To Beta Rs.24,000 (Rs.12,000 still in closing stock)
To Gamma Rs.3,600
Deptt. Beta To Gamma Rs.11,000 (Rs.4,400 still in closing stock)
Deptt. Gamma To Alpha Rs. 7,700 (Rs.3,000 still in closing stock)
iv) Commission payable to the Manager @ 10% on correct overall Company profit
after charging such commission.
Find correct Net profit of the company and the Commission payable to the General
Manager. (M-EX-2)

LEC 8: (58 Minutes)

Moon Ltd. has three departments. They are ‘Cloth Stitching Deptt.’, Selling Department
and General Administration Department. Cloth Deptt. Transfers its goods to Selling
Deptt. @ 20% profit on Cost. From the following details, prepare Departmental Trading
A/c and Profit and Loss A/c for the year ended 31st Dec., 1998.
Cloth Stitching Deptt. Selling Dept.
Rs. Rs.
Opening Stock 1,20,000 80,000
Purchases 5,00,000 --
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 Wages and other exp. 1,25,000 27,500
Closing Stock 45,000 95,000
Sales --- 11,05,000
During the year goods costing Rs.50,000 to selling department, were returned back to
cloth department.
The expenses of General Admn. Deptt. are as follows:
Manager’s salary @ Rs.1,000 p.m.
Clerk’s Salary (2 No.s) @ Rs.600 p.m.
Maintenance Expenses Rs.9,600
Apportion General Deptt. Expenses equally to the ‘Cloth stitching’ and ‘Selling Deptt’.
(M-EX-3)

LEC 9: (48 Minutes)

Complex Ltd., has 3 departments, A, B, C. The following information is provided:
A B C
Rs. Rs. Rs.
Opening Stock 3,000 4,000 6,000
Consumption of direct materials 8,000 12,000 --
Wages 5,000 10,000 --
Closing Stock 4,000 14,000 8,000
Sales -- -- 34,000
Stock of each department is valued at cost to the department concerned. Stocks of A
department are transferred to B at a margin of 50% above departmental cost, Stocks,
of B department are transferred to C department at a margin of 10% above
departmental cost. Other expenses were:
Rs.
Salaries 2,000
Printing & Stationery 1,000
Rent 6,000
Interest paid 4,000
Depreciation 3,000
Allocate expenses in the ratio of departmental gross profit. Opening figures of reserves
for unrealised profits on departmental stock were:
Department B Rs.1,000
Department C Rs.2,000
Prepare Department Trading and Profit & Loss Accounts for the year ending
March 31, 1999. (M-2)

LEC 10: (110 Minutes)

Alpha Ltd., has a factory with two manufacturing departments ‘X’ and ‘Y’. Part of the
output of department X is transferred to department Y for further processing and the
balance is directly transferred to selling department. The entire production of
department Y is directly transferred to the selling department. Inter-departmental stock
transfers are made as follows:
X department to Y department at 33.1/3% over departmental cost.
X department to selling department at 50% over departmental cost.
Y department to selling department at 25% over departmental cost.
The following information is given for the year ending 31 st March, 1999.
Dept.X Depat. Y Selling Depat.
Units Rs. Units Rs. Units Rs.
Opening stock
Finished Goods 60 60,000 20 40,000 50 1,28,000
Raw materials - - - - - -
Raw materials consumed - 1,82,000 - 20,000 - -
Labour charges - 70,000 - 32,000 - -
Sales - - - - 120 4,80,000
Closing stock
Finished Goods 40 - 50 60 -
Out of the total transfer by X department 30 units were transferred to selling
department while the remaining to department Y. The per unit material and labour
consumption of X department on production to be transferred directly to the selling
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 department is 300 per cent of the labour and material consumption on units transferred
to Y department. General Administration expenses Rs.1,80,000. The opening stock &
closing stock of Dept. X are meant for transfer to Dept. Y.
Prepare Departmental Profit and Loss Account and General Profit and Loss
Account. (M-3)

LEC 11: (60 Minutes)

Gram Udyog, a retail store, has two departments, ‘Khadi and Silks’ for each of which
stock account and memorandum ‘mark up’ accounts are kept. All the goods supplied to
each department are debited to the stock account at cost plus a ‘mark up’, which
together make-up the selling-price of the goods and in the account of the sale proceeds
of the goods are credited. The amount of ‘mark-up’ is credited to the Departmental
Mark up Account. If the selling price of any goods is reduced below its normal selling
price, the reduction ’marked down’ is adjusted both in the Stock Account and the
Departmental ‘Mark up’ Account. The rate of ‘Mark up’ for Khadi Department is
33.1/3% of the cost and for Silks Department it is 50% of the cost.
The following figures have been taken from the books for the year ended December 31,
1998:
Khadi D Silks D
Rs. Rs.
Stock as on January 1st at cost 10,500 18,600
Purchases 75,900 93,400
Sales 95,600 1,25,000
(1) The stock of Khadi on January 1, 1998 included goods the selling price of which
has been marked down by Rs.1,260. These goods were sold during the year at
the reduced prices.
(2) Certain stock of the value of Rs.6,900 purchased for the Khadi Department were
later in the year transferred to the Silks department and sold for Rs.10,350. As
a result though cost of the goods is included in the Khadi Department the sale
proceeds have been credited to the Silks Department.
(3) During the year 1998 to promote sales the goods were marked down as follows:
Cost Marked down
Rs. Rs.
Khadi 5,600 360
Silk 10,000 2,000
All the goods marked down, were sold except Silks of the value of Rs.5,000 marked
down by Rs.1,000
(4) At the time of stock-taking on December 31, 1998 it was discovered that Khadi
cloth of the cost of Rs.390 was missing and it was decided that the amount be
written off.
You are required to prepare for both the departments for the year 1998.
(a) The Memorandum Stock Account; and
(b) The Memorandum Mark up Account. (M-4)

LEC 12: (45 Minutes)

Fairways Limited is retail organisation with several departments. Goods supplied to
each department are debited to memorandum departmental stock account at cost, plus
a fixed percentage (mark-up) to give the normal selling price. The mark up is credited
to a memorandum departmental ‘Mark-up account’, any reduction in selling prices
(mark-down) will require adjustment in the stock account and in mark-up account. The
mark up for Department A for the last three years has been 40%.
Figures relevant to Department A for the year ended 30th June, 1998 were as follows:
Stock 1st July, 1997, at cost 80,000
Purchases, at cost 1,80,000
Sales 3,20,000
It is further ascertained that:
(1) Goods purchased in the period were marked down by Rs.1,400 from a cost of Rs.16,000.
Marked-down stock costing Rs.4,000 remained unsold on 30th June, 1998.
(2) Stock shortages at the year end, which had cost Rs.1,200, were to be written off.

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 (3) Stock at 1st July, 1997 including goods costing Rs.8,200 had been sold during the year
and had been marked down in the selling price by Rs.740. The remaining stock had been sold
during the year.
(4) The departmental closing stock is to be valued at cost subject to adjustments for mark-
up and mark-down.
You are required to prepare:
i) A departmental Trading Account for A department for the year ended June, 1998 in Head
Office books;
ii) A Memorandum Stock Account for the year;
iii) A Memorandum Mark-up Account for the year. (M-5)

LEC 13: (49 Minutes)

Becket & Co. Purchased goods for its three departments as follows:
Department: X 4,000 units
Department: Y 9,000 units Total cost Rs.1,10,000
Department: Z 4,000 units

Sales of three departments were as follows:

Department: X 3,600 Units @ Rs.7.50 per unit
Department: Y 9,800 Units @ Rs.9.00 per unit
Department: Z 3,650 Units @ Rs.13.50 per unit
Opening Stock as on 1-1-1998 was as follows:
Department: X 200 units
Department: Y 1,400 units
Department: Z 150 Units
Assuming that the gross profit ratio is uniform in all the three departments, prepare
trading a/c for the year ended 31st December, 1998.
(M-EX-1)