Theory question 109
Departmental AccountsThe following balances were extracted from the books of Emeka company Limited for the year ended 31st December, 2016. (Department - Amount, ₦)
Sales: Cloth 68,000; Dress 54,000; Shoes 41,000
Purchases: Cloth 44,800; Dress 37,060; Shoes 29,060
Electricity and Water 3,570
Sales expenses 1,956
Commission paid 3,260
Printing and Stationery 750
Wages and salaries 27,000
Miscellaneous expenses 6,900
Inventory 01:01:16: Cloth 12,410; Dress 9,550; Shoes 7,750
Inventory 31:12:16: Cloth 10,540; Dress 7,350; Shoes 8,280
Additional information: Expenses are to be apportioned between departments as follows: (i) Sales expenses and commission in proportion to sales; (ii) Printing and stationery; wages and salaries in the proportion 6:4:5 respectively; (iii) Other expenses equally.
You are required to prepare a Departmental Trading and Profit and Loss Account for the year ended 31st December, 2016.
Show the model answer
Trading (Cloth / Dress / Shoes, ₦): sales 68,000 / 54,000 / 41,000. Cost of sales: opening 12,410 / 9,550 / 7,750 + purchases 44,800 / 37,060 / 29,060 - closing 10,540 / 7,350 / 8,280 = 46,670 / 39,260 / 28,530. Gross profit 21,330 / 14,740 / 12,470.
Expenses: sales expenses (68:54:41) 816 / 648 / 492; commission (68:54:41) 1,360 / 1,080 / 820; printing and stationery (6:4:5) 300 / 200 / 250; wages and salaries (6:4:5) 10,800 / 7,200 / 9,000; electricity and water (equally) 1,190 / 1,190 / 1,190; miscellaneous (equally) 2,300 / 2,300 / 2,300. Totals 16,766 / 12,618 / 14,052.
Net profit/(loss): Cloth 4,564; Dress 2,122; Shoes (1,582). Overall net profit ₦5,104.
Sales ratio 68:54:41 has total 163; 6:4:5 has total 15.