P/S: Pls help me to solve this problem. i really don't get it and i have to present the answer in front of the classroom by next week.
from the following list of balances you are required to prepare a departmental trading and profit and loss account in columnar form for the year ended 31 march 20x5, in respect of the business carried on under the name of Jack's Superstores:
$ $
Rent and business rates 9,300
delivery expenses 3,600
commission 10,000
insurance 1,800
purchases: dept A 101,300
B 81,200
C 62,900
245,400
Discounts received 2,454
Salaries & wages 91,200
advertising 2,307
Sales: dept A 180,000
B 138,000
C 82,000
400,000
Depreciation 4,200
Opening Stock: dept A 27,100
B 21,410
C 17,060
65,570
admin. & gen. expenses 19,800
Closing stock: dept A 23,590
B 15,360
C 18,200
57,150
Except as follows, expenses are to be apportioned equally between the departments:
Delivery expenses - proportionate to sales.
commission- 2 1/2 per cent of sales.
salaries & wages; insurance - in the proportion of 3:2:1.
Discounts received- 1 per cent of purchases.
To prepare a departmental trading and profit and loss account for Jack's Superstores, we need to allocate the expenses between the departments and calculate the profit or loss for each department separately. Here are the steps to solve the problem:
1. Create a table with the following columns: Department A, Department B, Department C, and Total.
2. Start by entering the given balances in the respective columns:
- Rent and business rates: $9,300 (Total column)
- Delivery expenses: $3,600 (To be apportioned based on sales)
- Commission: $10,000 (To be calculated as a percentage of sales)
- Insurance: $1,800 (To be apportioned based on salaries & wages)
- Purchases: $101,300 (Department A column), $81,200 (Department B column), $62,900 (Department C column)
- Discounts received: $2,454 (To be calculated as a percentage of purchases)
- Salaries & wages: $91,200 (To be apportioned based on departments)
- Advertising: $2,307 (Total column)
- Sales: $180,000 (Department A column), $138,000 (Department B column), $82,000 (Department C column)
- Depreciation: $4,200 (To be allocated equally between departments)
- Opening Stock: $27,100 (Department A column), $21,410 (Department B column), $17,060 (Department C column)
- Admin. & gen. expenses: $19,800 (Total column)
- Closing stock: $23,590 (Department A column), $15,360 (Department B column), $18,200 (Department C column)
3. Calculate the apportioned expenses:
- Delivery expenses: Allocate based on the proportion of sales. Calculate the percentage of sales for each department (Department A sales / Total sales) and multiply it by the total delivery expenses.
- Commission: Calculate 2.5% of sales for each department.
- Insurance: Allocate based on the proportion of salaries & wages. Calculate the percentage of salaries & wages for each department (Department A salaries & wages / Total salaries & wages) and multiply it by the total insurance.
- Discounts received: Calculate 1% of purchases for each department.
4. Calculate the totals for each column by summing up the respective values.
5. Subtract the closing stock from the opening stock to calculate the cost of goods sold for each department.
6. Calculate the gross profit for each department by subtracting the cost of goods sold from the sales.
7. Calculate the net profit/loss for each department by subtracting the apportioned expenses and the gross profit from the totals.
8. Complete the table by filling in the calculated values for each department.
9. Finally, calculate the total profit/loss for all departments by summing up the net profits/losses.
By following these steps, you will be able to prepare the departmental trading and profit and loss account for Jack's Superstores.