Theory question 106
Departmental AccountsSule runs two departments for Suya and Tea. The following balances were extracted from his ledgers at 31st December, 1986.
Sales: Suya Cr ₦5,000; Tea Cr ₦4,500
Stocks 1/1/86: Suya (Raw Meat) Dr ₦200; Tea Dr ₦250
Purchases: Raw Meat for suya ₦2,000; Ingredients for suya ₦500; Tea bags ₦1,000; Milk and Sugar for Tea ₦600
Sundry expenses for suya: ₦300
Salaries of Assistants: Suya ₦600; Tea ₦400
Electricity: ₦240
Cleaning: ₦110
General Expenses: ₦200
Debtors: ₦3,100
Totals: Dr ₦9,500, Cr ₦9,500
You are given the following additional information: (a) Stocks at 31st December 1986: Suya (raw meat) ₦50; Tea bags ₦40 (b) Electricity, cleaning and general expenses are apportioned equally between the two departments.
Prepare in departmental form the Suya and Tea Trading and Profit and Loss Accounts for the year ended 31st December, 1986. (Total Column is not required).
Show the model answer
Departmental Trading and Profit and Loss Account for the year ended 31 December 1986 (Suya | Tea)
Sales 5,000 | 4,500
Opening stock 200 | 250; purchases: raw meat 2,000 + ingredients 500 | tea bags 1,000 + milk and sugar 600; goods available 2,700 | 1,850
Less closing stock 50 | 40; cost of sales 2,650 | 1,810
Gross profit ₦2,350 | ₦2,690
Expenses: sundry expenses 300 | –; salaries 600 | 400; electricity 120 | 120; cleaning 55 | 55; general expenses 100 | 100; total 1,175 | 675
Net profit ₦1,175 | ₦2,015
(Debtors ₦3,100 is a balance sheet item, not in these accounts.)
Charge each department its own costs directly and split only the shared costs (electricity, cleaning, general) equally.