Departmental Accounting Inter-Departmental Transfers: Maruthu & Sons Case Study
Learn how Maruthu & Sons manage their Cloth and Readymade departments through inter-departmental transfers at selling prices. Explore their trading and profit & loss accounts for the year ending 31-12-2019, along with insights into general profit & loss. Gain a comprehensive understanding of departmental accounting practices and calculations.
Download Presentation
Please find below an Image/Link to download the presentation.
The content on the website is provided AS IS for your information and personal use only. It may not be sold, licensed, or shared on other websites without obtaining consent from the author. If you encounter any issues during the download, it is possible that the publisher has removed the file from their server.
You are allowed to download the files provided on this website for personal or commercial use, subject to the condition that they are used lawfully. All files are the property of their respective owners.
The content on the website is provided AS IS for your information and personal use only. It may not be sold, licensed, or shared on other websites without obtaining consent from the author.
E N D
Presentation Transcript
DEPARTMENTAL ACCOUNTING Inter Departmental Transfers At Selling Price Dr. P.ANWAR BASHA PG Dept. of Commerce(SF) Jamal Mohamed college (Autonomous) Tiruchirappalli, Tamil Nadu - 620020
Maruthu & Sons has two department; Cloth and Readymade. Readymade clothes are manufactured by the firm itself out of cloth supplied by the cloth department at its usual selling rate. From the following figures, prepare departmental trading and profit & Loss A/c and General profit & Loss A/c for the year ending 31-12-2019. Particulars Opening Stock on 1-1-19 Purchases Sales Transfer to Readymade dept. Manufacturing expenses Closing stock on 31-12-19 General expenses incurred for both the departments were Rs.1, 20,000. Cloth Departmental 3,60,000 29,00,000 35,00,000 4,50,000 ---- 1,00,000 Readymade Departmental 60,000 20,000 7,00,000 ---- 1,40,000 48,000 The stocks in the Readymade Departmental may be considered as consisting of 66 2/3% Cloth and 33 1/3% other expenses. The Cloth department earned profit at the rate of 18% in 2018.
Maruthu & Sons has two department; Cloth and Readymade. Readymade clothes are manufactured by the firm itself out of cloth supplied by the cloth department at its usual selling rate. From the following figures, prepare departmental trading and profit & Loss A/c and General profit & Loss A/c for the year ending 31-12-2019. Particulars Opening Stock on 1-1-19 Purchases Sales Transfer to Readymade dept. Manufacturing expenses Closing stock on 31-12-19 General expenses incurred for both the departments were Rs.1, 20,000. Cloth Departmental 3,60,000 29,00,000 35,00,000 4,50,000 ---- 1,00,000 Readymade Departmental 60,000 20,000 7,00,000 ---- 1,40,000 48,000 The stocks in the Readymade Departmental may be considered as consisting of 66 2/3% Cloth and 33 1/3% other expenses. The Cloth department earned profit at the rate of 18% in 2018. SOLUTION Departmental trading and profit & Loss A/c for the year ending 31-12-19 Particulars To Opening Stock To Purchases Cloth 3,60,000 Readymade 60,000 By Sales Particulars Cloth 35,00,000 Readymade 7,00,000 By Transfer to Readymade dept. By Closing stock 29,00,000 20,000 4,50,000 ----- To Transfer to Cloth dept. To Manufacturing expenses To Gross profit c/d To Indirect expenses To Net Profit c/d ------ 4,50,000 1,00,000 48,000 ------ 1,40,000 78,000 7,48,000 ------ By Gross profit b/d 78,000 78,000 7,90,000 40,50,000 40,50,000 7,90,000 7,48,000 78,000 ----- 7,90,000 7,90,000 7,90,000 78,000
General profit & Loss A/c for the year ending 31-12-19 Particulars To General expenses Particulars By Net profit (790000+78000) By Stock Reserve (Opening) 60,000x2/3x18% 7,48,800 8,75,200 1,20,000 8,68,000 To Stock Reserve (closing) 48,000x2/3x20% To Net profit (bal.fig) 6,400 7,200 8,75,200
Working Notes 66 2/3 % = 2/3 198+2 200 1 200 2 --------- = ----- x ---- = ------- or ---- 3 3 100 300 3 Stock Reserve calculate as following Rate of gross profit on sales of cloth department = 7, 90,000/39, 50,000x100=20% Sales= 35, 00,000+4, 50,000=39, 50,000
