Chapter 9 Departmental Account - Example

Hock Guan runs a shop with two departments, one selling toys and the other selling books.

Trial Balance
As At 31 March 2017
Debit Credit
RM RM
Inventories, 1 April 2016: Toys 5,800
Books 3,700
Purchases: Toys 34,800
Books 25,200
Sales: Toys 85,000
Books 65,000
Sales Returns: Toys 8,500
Books 6,500
Commission Income: Toys 6,400
Books 3,200
Rental 3,500
Salaries 18,000
Water And Electricity 1,500
Carriage Outwards 3,000
Repairs And Maintenance 7,500
Bad Debts 800
Discounts Allowed 1,100
Capital, 1 April 2016 60,000
Accounts Receivable and Accounts Payable 23,100 13,500
Furniture And Fixtures 30,500
Office Equipment 40,000
Bank 13,170
Cash 6,430
233,100 233,100

Additional information:
(i) Inventories at 31 March 2017: Toys RM 1,200; Books RM 2,200.
(ii) Accrued rental was RM 1,500.
(iii) All expenses and discount allowed were to be apportioned as: Toy 3/5; Books 2/5.
(iv) During the year, the Toys Department took goods worth RM 3,000 from the Books Department.

You are required to prepare:

(a) Departmental Income Statement for the year ended 31 March 2017;
(b) Statement Of Financial Position for the whole business as at 31 March 2017.
Name: Class: Adm No: Marks:

Chapter 9 Departmental Account - Exercise 1

Yap owns a business with two separate departments: Woods and Plastics. The following balances were
extracted from his books at 31 December 2016:

Woods Plastics Total

RM RM RM
Sales 155,600 254,000 409,600
Opening Inventory 8,000 12,000 20,000
Purchases 93,000 112,500 205,500
Return Outwards 3,000 2,500 5,500
Return Inwards 5,600 4,000 9,600
Closing Inventory 6,300 15,900 22,200
Rent 12,000
Advertising Expenses 6,400
Electricity 3,500
Carriage Outwards 2,600
Salaries 24,000
Carriage Inwards 5,600

Additional information:
(a) The following adjustments had to be taken into account:
(i) RM 1,000 for the rent had been prepaid;
(ii) RM 2,000 was outstanding for the advertising expenses at the year end.

(b) Rent as well as electricity were to be apportioned according to the floor space occupied:
Woods 200 square metres ; Plastics 300 square metres.

(c) Advertising expenses and carriage outwards were to be divided in proportion to their net sales.
Sales commissions were to be calculated for each department based on 5% of its net sales.

(d) Salaries were to be apportioned based on the number of employees:

Woods 3 persons;
Plastics 5 persons.

(e) Carriage inwards were to be divided in proportion to their net purchases.

You are required to prepare a Income Statement for each department and the business as a whole for
the year ended 31 December 2016.
Name: Class: Adm No: Marks:

Chapter 9 Departmental Account - Exercise 2

Kenny Enterprise is a retail store with two departments dealing in souvenirs and cameras respectively.
The Trial Balance of the business as at 30 June 2016 was as follows:

Debit Credit
RM RM
Capital, 1 July 2015 165,000
Fixtures And Fittings 30,000
Motor Vehicle 50,000
Drawings 63,160
Inventory, 1 July 2015: Souvenirs 22,100
Cameras 48,000
Sales: Souvenirs 131,300
Cameras 393,900
Purchases: Souvenirs 106,000
Cameras 300,000
Bad Debts: Souvenirs 400
Cameras 600
Rent 34,000
Lighting Charges 4,500
Cleaning Expenses 4,500
Advertising Costs 13,000
Cash At Bank 6,000
Accounts Receivable and Accounts Payable 15,000 7,060
697,260 697,260
Additional information:
(a) Rent prepaid amounting to RM 400 and lighting charges owing was RM 500.

(b) To apportion rent and cleaning expenses according to floor space occupied.
The floor space of the Souvenirs Department is twice that of the Cameras Department.

(c) Advertising costs were to be apportioned between the two departments based on their sales.

(d) It is the policy of the business to charge depreciation on non-current assets at the rate of 10%
per annum on cost.

(e) Make an allowance for doubtful debts at 5% of accounts receivable and allocate it between the
departments in proportion to their bad debts.

(f) Other expenses were to be charged 1/4 to the Souvenirs Department and 3/4 to the Cameras Department.

(g) The inventory valued at 30 June 2016 were: Souvenirs RM 26,600; Cameras RM 54,000.

You are required to prepare:

(a) Departmental Income Statement for the year ended 30 June 2016;
(b) Statement Of Financial Position for the whole business as at 30 June 2016.
Name: Class: Adm No: Marks:

Chapter 9 Departmental Account - Exercise 3

Doctor CD Loo is the proprietor of a Pharmacy CD Loo selling medicines and rehabilitation equipments.

For the purpose of his financial statements he wishes the business to be divided into 2 departments:
Department 1: Medicines Department 2: Rehabilitation Equipments

The following balances have been extracted from his normal ledger at 31 December 2017:

Debit Credit
RM RM
Sales: Department 1 75,000
Department 2 100,000
Inventories at 1 January 2017: Department 1 1,450
Department 2 2,120
Purchases: Department 1 51,000
Department 2 49,000
Salaries of sales assistant- Department 2 8,800
Repairs of rehabilitation equipments 3,400
Office Salaries 14,500
Discount Allowed 4,900
Discount Received 3,000
Insurance 500
Heating And Lighting 2,500
General Expenses 1,440

Additional information:
1. Inventories at 31 December 2017 was valued at:-
Department 1: RM 2,500 Department 2: RM 3,100

2. The proportion of the total floor area occupied by each department was:-
Department 1: three-fifths Department 2: two-fifths
*3/5 *2/5
3. Department 1 took goods worth RM 1,200 from Department 2.

4. The apportionment should be made by using the methods as shown:

Area Office Salaries, Insurance, Heating And Lighting, And General Expenses.
Gross Sales Discount Allowed
Gross Purchases
Discount Received

You are required to prepare Pharmacy CD Loo departmental Income Statement for the year ended
31 December 2017 showing the department profits.
Name: Class: Adm No: Marks:

Chapter 9 Departmental Account - Exercise 4

Su owns a business with two separate departments: Curtains and Textiles. The following account balances
were extracted from his books as at the end of the financial year on 31 March 2015:
Curtains Textiles
Department Department
RM RM
Inventory, 1 April 2014 7,000 4,600
Purchases 40,000 35,000
Sales 90,000 78,000
Carriage Inwards - 600
Return Outwards - 200
Return Inwards 1,000 100
Total
RM
Electricity Expenses 980
Advertising Expenses 1,500
Insurance Expenses 3,600
Delivery Expenses 690
Rent And Rates 10,400
Wages And Salaries 8,800
Repairs And Maintenance 900
Delivery Van 20,000
Furniture And Fixtures 15,500
Additional information:
(a) Inventory, 31 March 2015: Curtain Department RM 7,200
Textiles Department RM 4,500
(b) Textiles sales of RM 3,500 was wrongly recorded as the sales of curtains.
(c) No record was made for RM 220 worth of textiles taken by the owner for his family use.
(d) During the financial year, textiles of cost RM 5,000 were tranferred for use in the Curtain Department.
(e) An additional advertising expense of RM 700 was still outstanding on 31 March 2015.
(f) From the amount of RM 10,400 rent and rates, RM 1,600 was included for rent of March and April 2015.
(g) Repairs and maintenance were to be apportioned between the two departments according to the floor
space occupied. The floor space of the Curtains Department is twice the Textiles Department.
(h) Provision for depreciation: Delivery Van 25% on cost;
Furniture and fixtures 10% on cost.
(i) The following are the ratios of apportionment of expenses between the two departments:
Expenses Curtains Department Textiles Department
Electricity expenses / Advertising expenses 1 1
Insurance expenses 2 3
Delivery expenses 2 1
Rent and rates 3 1
Wages and salaries/ Depreciation 3 2

You are required to prepare departmental Income Statement for the year ended 31 March 2015 in
vertical form with three columns, namely "Curtains Department", "Textiles Department" and "Total".