DEPARTMENTAL ACCOUNTS

Importance of Departmental Account

 Performance Measurement: To evaluate the financial performance of individual

departments, allowing for comparative analysis.

 Budget Management: To create accurate budgets for each department, helping in

financial planning and control.

 Cost Control: To identify and monitor expenses, enabling departments to manage costs
effectively.

 Resource Allocation: To determine how resources can be best allocated based on

departmental performance and needs.

 Accountability: To hold department heads accountable for their financial results and
operational efficiency.

 Profitability Analysis: To assess which departments contribute most to the overall

profitability of the organization.

 Decision Support: To provide management with the necessary data for informed decision-
making regarding investments and departmental changes.
 Allocation of Indirect Expenses

Illustration 6:
Departmental Trading and Profit and Loss Account for the year ended ….
Particular Basis Dept. Dept. Total Particu Basis Dept. Dept. Total
s A B Rs. lars A B Rs.
Rs. Rs. Rs. Rs.
To Give 60,000 90,000 1,50,000 By Given 6,00,00 8,00,00 14,00,
Opening n Sales 0 0 000
Stock
To Give 3,60,00 5,40,00 9,00,000 By Given 20,000 80,000 1,00,0
Purchases n 0 0 Closing 00
stock
To Gross 2,00,00 2,50,00 4,50,000
Profit 0 0
6,20,00 8,80,00 15,00,000 6,20,00 8,80,00 15,00,
0 0 0 0 000
To Salaries Give 25,000 30,000 55,000 By 2,00,00 2,50,00 4,50,0
n Gross 0 0
 Profit
To Sales 12,000 16,000 28,000
Advertise
ment
To Rent Equa 10,000 10,000 20,000
l
To General 2:3 24,000 36,000 60,000
expenses
To Net 1,29,00 1,58,00 2,87,000
Profit 0
2,00,00 2,50,00 4,50,000 2,00,00 2,50,00 4,50,0
0 0 0 0 00

Working Note:
Sales Ratio:
A : B
6,00,000 : 8,00,00
i.e. 3:4

Illustration 7:
Departmental Trading and Profit and Loss Account for the year ended
31.03.2014
Particular Basis Dep Dept Dep Tota Particul Basis Dep Dep Dept Total
s t. H . M t. T l ars t. H t. .T Rs.
Rs. M
To Opening Given 45,0 60,00 27,8 1,32,8 By Sales Given 3,02, 4,53, 1,51,3 9,07,80
Stock 000 0 00 00 600 900 00 0
To Purchases Given 2,24, 3,55,0 1,54, 7,33,0 By Given 35,0 64,0 75,00 1,74,00
000 00 000 00 Closing 00 00 0 0
stock
To Gross 68,6 1,02,9 44,5 2,16,0
Profit 00 000 00 00
3,37, 5,17,9 2,26, 10,81, 3,37, 5,17, 2,26,3 10,81,8
600 00 300 800 600 900 00 00
To Salaries Note 15,0 30,00 15,0 60,00 By Gross 68,6 1,02, 44,50 2,16,00
00 0 00 0 Profit 00 900 0 0
To 1:2:1 11,2 22,50 11,2 45,00 By Net - - 150 150
Rent/Taxes 50 0 50 0 Loss
To Discount Sales 4,00 6,000 2,00 12,00
allowed 0 0 0
To Sales 11,5 17,25 5,75 34,50
Advertising 00 0 0 0
To Trade Sales 3,00 4,500 1,50 9,000
Exp. 0 0
To 1:1:1 5,00 5,000 5,00 15,00
Depreciation 0 0 0
To Sales 6,10 9,150 3,05 18,30
Electricity 0 0 0
To Carriage Sales 2,20 3,300 1,10 6,600
outward 0 0
To Net 10,5 5,200 - 15,75
Profit 50 0
68,6 1,02,9 44,6 2,16,1 68,6 1,02, 44,65 2,16,15
00 00 50 50 00 900 0 0

Working Note
1. Salaries: 1 salesman works for Dept. M alone. His salary Rs.2,500 * 12 =
Rs.30,000 will be debited to Dept. M alone. Other salesman works for Dept. H
& T equally. So his salary Rs.30,000 will be divided equally between Dept. H &
T.

2. Sales Ratio
H : M :T
3,02,600 : 4,53,900 : 1,51,300
2 :3 :1

Illustration 10:
Departmental Trading and Profit and Loss Account for the year ended
31.03.2014
Particular Basis Dept. Dept. Total Particu Basis Dept. Dept. Total
s A B Rs. lars A B Rs.
Rs. Rs. Rs. Rs.
To Give 250 200 450 By Given 15,000 10,000 25,000
Opening n Sales
Stock
To Give 11,800 8,200 20,000 By Given 300 150 450
Purchases n Closing
stock
To Gross 3,250 1,750 5,000
Profit
15,300 10,150 25,450 15,300 10,150 25,450
To Salaries Give 1,000 750 1,750 By
n Gross
Profit
To Give 150 - 150
Delivery n
wages
To Office Sales 450 300 750
salaries
To Fire Area 10 40 50
Insurance
To Rates Area
To Area
Lighting &
Heating
To Sales
Telephone
To Area
Cleaning
To Repairs Area
to Premises
To Sales
Carriage
out
To Office Sales
Exp.
To Net
Profit

Working Note:
 Sales Ratio:
A : B
6,00,000 : 8,00,00
i.e. 3:4

Illustration 11
Departmental Trading and Profit and Loss Account for the year ended ….
Particula Basis Dept. Dept. Total Particu Basis Dept. Dept. Total
rs A B Rs. lars A B Rs.
Rs. Rs. Rs. Rs.
TO 1,50,00 2,10,00 3,60,000 BY SALE 6,00,00 7,00,00 13,00,
OPENING 0 0 S 0 0 000
STOCK
TO 4,50,00 5,50,00 10,00,000 BY 2,50,00 1,85,00 4,35,0
PURCHASE 0 0 CLOSING 0 0 00
STOCK
TO 9000 11000 20,000
CARRIAGE
INWARD

TO GROSS 2,41,000 1,14,00

PROFIT 0
8,50,000 8,85,000 13,80,000 8,50,000 8,85,00 17,35,
0 000
TO Sales 15,000 20,000 35,000 By 2,41,00 1,14,00 3,55,0
SALARIES 0 0 00
gross
profit
TO RENT 36,000 24,000 60,000 By 1,800 2,200 4000
/RATES
discoun
t
receive
d
To Sales 12,000 14000 26,000
Travellin
g expense
To Sales 3,000 3,500 6,500
carriage
outward
To Sales 12,000 18,000 30,000
general
expenses
To Sales 3,000 3,500 6,500
advertisin
g
To sales 3,600 4,200 7,800
discount
To Sales 1,440 2,160 3,600
insurance
To selling sales 6,000 7,000
commissi
on
To net 1,50,76 19,840
profit 0
2,42,80 1,16,20 1,75,400 2,42,80 1,16,20 3,59,0
0 0 0 0 00

Working Note:
Sales Ratio:
A : B
6,00,000 : 7,00,000

Illustration 12:
Departmental Trading and Profit and Loss Account for the year ended
31.03.2014
Particular Basis Dept. Dept. Total Particu Basis Dept. Dept. Total
s snack cold Rs. lars snacks cold Rs.
s drink Rs. drinks
Rs. s Rs.
Rs.
To opening 58,600 46,800 1,05,400 By 9,60,00 7,20,00 16,80,
stock sales 0 0 000
To 3,78,00 4,52,00 8,30,000 By 2,58,50 2,35,60 4,94,1
purchase 0 0 closing 0 0 00
stock
To carriage 12,400 8,400 20,800
inward

To gross 4,69,50 4,48,40

profit 0 0
12,81,5 9,55,60 9,35,400 12,81,5 9,55,60 21,74,
 00 0 00 0 100

To salaries 46,800 31,200 78,000 By 4,69,50 4,48.40 9,17,9

gross 0 0 00
profit
To rent/ 7,440 11,160 18,600 By 3,270 2,180 5,450
rates discoun
t
To 20,400 15,300 35,700
travelling
expense
To carriage 4,160 3,120 7,280
outward
To general 18,000 18,000 36,000
expense
To 2,300 2,300 4,600
insurance
To 16,200 12,150 28,350
advertising
To 4,080 3,060 7,140
discount
To selling 9,600 7,200 16,800
commissio
n

To net 3,43,79 3,47,09 6,90,880

profit 0 0
4,72,97 4,50,58 2,32,470 4,72,97 4,50,58
0 0 0 0

Working Note:
Sales Ratio:
A : B
9,60,000 : 7,20,000
i.e.

Illustration: 13
 Departmental Trading and Profit and Loss Account for the year ended
31.03.2018
Particular Basis Dep Dept Dep Tota Particul Basis Dep Dep Dept Total
s t. A . B t. C l ars t. A t. B . C Rs.
Rs.
To 1,60, 1,25,0 2,85,0 By sales 1,75, 1,40, 3,15,00
Purchase 000 00 00 000 000 0
To spares 80,0 80,00 By service 35,.00 35,000
000 0 0
To 12,0 1200 48,00 By closing 60,1 20,3 44,60 1,25,00
salaries/wag 00 24,00 0 0 stock 00 000 0 0
es 0
To rent 2,40 2,400 6,00 10,80
0 0 0
To sundry 5,50 4,400 11,0 11,00
expense 0 0 0

To net profit 55,2 4,500 By net 19,50

00 loss 0

2,35, 1,60,3 9,91, 4,34,8 2,35, 1,60, 9,91,0 4,75,00

100 00 00 00 100 300 0 0

Working Note
1. Salary/wages
48000/1:2/1:4
A/12000 B/24000 C/12000
2. Rent
500/12=6000-10500=4800
A/2400 B/2400 C/6000