Question

6. Sesay operates a shop with two Departments A and B. Balances were extracted from his books as at 31st December 2019 (Sales, Stock, Purchases, Wages of Sales Assistants, Delivery Expenses for Dept A, and Common Expenses: general office salaries, rates, fire insurance, electricity, repairs, telephone, cleaning, auditing charges, stationery), with closing stock valuations and an apportionment basis for common expenses (one-fifth to Dept A, four-fifths to Dept B, except general office expenses apportioned on the basis of sales). You are required to prepare Sesay's Departmental, Trading, Profit and Loss Account for the year ended 31st December 2019.

Accepted Answer

Departmental Trading, Profit and Loss Account for year ended 31 December 2019:
Department A: Sales GH¢30,000; Cost of goods sold (Stock 500 + Purchases 23,600 - Closing stock 600) = GH¢23,500; Gross profit GH¢6,500 less Wages GH¢2,000 and Delivery expenses GH¢300 = Gross profit b/d GH¢4,500.
Department B: Sales GH¢20,000; Cost of goods sold (Stock 400 + Purchases 16,400 - Closing stock 300) = GH¢16,500; Gross profit GH¢3,500 less Wages GH¢1,500 = Gross profit b/d GH¢2,000.
Common expenses apportioned between A and B (based on sales for general office salaries/telephone/stationery/auditing, and one-fifth/four-fifths for the rest): General office expenses (A:900, B:600), Rates (A:52, B:208), Fire insurance (A:52, B:208), Electricity (A:48, B:192), Repairs (A:100, B:400), Telephone (A:300, B:200), Cleaning (A:120, B:480), Auditing charges (A:300, B:200), Stationery (A:720, B:480). Total expenses deducted from each department's gross profit b/d gives the departmental net profit figures as per the detailed workings.

WAEC Accounting 2021 Theory — Question 6

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