UNIVERSITY OF GHANA BUSINESS SCHOOL DEPARTMENT OF ACCOUNTING
UGBS 208: INTRODUCTION TO FINANCIAL ACCOUNTING 2ND SEMESTER 2015/2016 ACADEMIC YEAR
Tutorial Set 2 – Manufacturing Account Question 1
The Trial balance as at 31st March 2013 below was extracted from the books of Mr.
Bugabuga.
DR GH ¢
CR GH ¢
Capital 5,400
Plant and machinery (at cost) 16,000
Provision for depreciation on plant and machinery 5,630
Office equipment 7,750
Provision for depreciation on office equipment 1,300 Stocks on 01/04/12:
Direct material 2,200
Work-in-Progress 2,050
Finished goods 1,800
Wages 32,512
Purchases of direct material 11,735
Land and building 5,200
Drawing 2,000
Electricity 4,940
Advertising 2,250
Discount allowed 575
Interest on loan 600
Provision for unrealized profit at 31/03/12 300
Sales 70,000
Trade Debtors & Creditors 4,753 1,200
20% Loan from Kofi 4,000
Cash 117
Bank 7,652
Rates & Insurance 1,000
95,482 95,482
You are given the following additional information: 1. Stocks on 31/03/13 were:
Direct material GH¢1,500
W-I-P GH¢2,055
2. Depreciation expense for the year are to be estimated as follows:
Plant and machinery GH¢2,430
Office equipment GH¢1,235
3. Mr. Bugabuga took the following goods for his personal use:
Direct material GH¢1,250
Finished goods GH¢1,500
4. Common expenses are to be allocated as follows:
Manufacturing Administration
GH¢ GH¢
Electricity 3,705 1,235
Rates and insurance 800 200
Wages 22,760 9,752
5. Goods are transferred to trading department at a mark-up of 20%.
REQUIRED: Prepare the company’s manufacturing, income statement for the year ended 31st March 2013, and a statement of financial position as at that date.
Question 2
The trial balance of Protech International Ltd, a high-tech manufacturing company for the year ending 31/12/2014 is shown below:
GH¢ GH¢
Building 120,000
Capital 250,000
Debentures 74,000
Machinery 170,000
Bank 50,000
Cash 28,600
Sales 450,000
Equipment 80,000
Motor vehicles 110,000
Provision for depreciation:
Equipment 12,000
Motor vehicle 6,000
Purchase – Raw material 95,000
Account receivable 26,500
Account payables 28,400
Stock 01/01/14: Raw material 9,800
Partly finished goods 10,500
Finished goods 12,700
Returns inwards 7,300
Returns outwards 5,900
Carriage inwards 10,900
Carriage outwards 7,500
Interest receivable 10,000
Wages 40,000
Salaries 18,400
Rent 15,000
Electricity and gas 8,200
Repairs – factory 1,600
Lubricants 3,500
Selling and distribution expenses 6,500
Advertising expense 1,800
836,300 836,300
Additional information:
a) Depreciation is to be provided as follows: Machinery 10%, Equipment 15% and Motor vehicle 15%.
b) Closing stocks are: Raw material - GH¢9,600; Partly-finished goods - GH¢12,400; Finished goods - GH¢10,000.
c) Wages include GH¢12,000 being factory Supervisors and Managers salaries.
d) It is the company’s policy to allot 75% of the cost of rent, electricity and gas to production.
e) Rent accrued amounted to GH¢5,000
f) Electricity and gas amounting to GH¢1,200 were paid in advance.
g) The company earned a commission of GH¢4,500, but payment has not yet been received and no entries were made in the books.
Required: Prepare the manufacturing account, income statement for the year, as well as the statement of financial position as at year end.
Question 3
The trial balance of Goodness & Mercy Ltd, manufacturers of foot wares as at 30 June 2014 is as follows:
Dr Cr
GH¢ GH¢
Capital 1,156,000
Drawings 80,000
Cash and Bank 237,500
Trade Debtors and Creditors 569,500 488,680
Sales 4,000,000
Carriage outwards 23,600
Discount allowed 19,200
Bank charges 9,200
General administration expenses 53,600
Insurance 16,800
Rent and Rates 48,000
Administrative salaries 176,000
Machinery repairs 28,000
Salesmen's salaries 166,000
General factory expenses 124,000
Office equipment (cost GH¢100,000) 95,320
Plant and machinery (cost GH¢1,120,000) 920,000
Purchase of raw materials 1,480,000
Carriage inwards 14,000
Purchase returns 12,000
Royalties 28,000
Wages (direct GH¢720,000; factory indirect GH¢580,000) 1,300,000
Provision for unrealised profit (1 July 2013) 31,120
Inventory at 1 July 2013:
Raw Materials 84,000
Finished goods 155,600
Work in process (WIP) 54,000
5,687,800 5,687,800
The following information was also available as at 30th June 2014:
i) Inventory were valued as: Raw materials - GH¢260,000; Finished goods GH¢160,000 and WIP - GH¢60,000;
ii) Machinery repairs, rent and rates and insurance expenses are to be apportioned such that Factory takes 1.5 as much as Administration;
iii) Office equipment is to be depreciated at 15% on cost, and plant and machinery at 20% on the written down value;
iv) Insurance prepaid and rent due but not paid amounted to GH¢2,200 and GH¢1,400 respectively;
v) Manufactured goods are transferred to trading section at a profit and the figures in respect of the beginning and ending finished goods inventory include this profit element
You are required to prepare a manufacturing account, income statement for the year ended 30th June 2014, and a statement of financial position at that date.
The following Trial balance has been extracted from the books of Jesus Is King Ltd, manufacturers of hide for the local leather market, as at 31st December, 2014.
DR (GH ¢)
CR (GH ¢)
Inventory at 1/1/2014: Raw materials 22,000
Finished goods 37,500
Work-in-progress 14,900
Wages (direct GH¢160,000; indirect GH¢165,000) 325,000
Carriage inwards on raw materials 4,000
Purchases of raw materials 563,400
Plant & Machinery (cost GH¢280,000) 230,000
Computers 12,000
General factory expenses 83,500
Factory power 13,700
Administrative salaries 44,000
Rent 10,000
Insurance 4,200
General administrative expenses 15,700
Provision for unrealised profit (1/1/2014) 1,000
Accounts receivables and payables 142,300 63,000
Cash & Bank 183,000
Sales 1,200,000
Drawings 80,000
Capital as at 1/1/2014 521,200
1,785,200 1,785,200
Additional information:
a) Rent unpaid as at 31st December, 2014 amounted to GH¢2,000.
b) Rent and insurance are to be apportioned as: Factory 4/6 and Administration 2/6 c) Inventory at 31st December, 2014 was as follows: Raw materials GH¢25,000;
Wok-in-progress GH¢20,000; Finished goods GH¢50,000
d) Depreciation on plant & machinery, and computers is at 10% per annum on cost e) Goods manufactured were transferred at a value of GH¢1,074,000