Accounts FOR Manufacturing Firms PDF

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Manufacturing accounts lec notes...

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ACCOUNTS FOR MANUFACTURING FIRMS The trial balance of LBC Limited, a manufacturing firm for the year ended 31st December, 2018 is shown below: Debit Credit GH¢ GH¢ Inventories (1st January, 2018): Raw materials Work-in-progress Finished goods Fuel and light Administration salaries Rent and business rates Purchases of raw materials Sales Carriage outwards Royalties Factory wages Returns inward General office expenses Repairs to plant and machinery Trade Receivables and Payables Capital account Freehold premises Plant and machinery Accumulated depreciation on plant and machinery Cash

21,000 14,000 23,000 21,000 17,000 21,000 258,000 482,000 4,000 20,000 39,000 7,000 9,000 9,000 20,000

37,000 457,000

410,000 80,000 8,000 11,000 984,000 984,000

You are given the following additional information: i) Inventories in hand at 31st December, 2018:  Raw materials GH¢25,000  Work in progress GH¢11,000  Finished goods GH¢26,000 ii) Depreciation of 10% on plant and machinery using the straight line method. iii) 80% of fuel and light and 75% of rent and rates to be charged to manufacturing. iv) Doubtful debts provision: 5% of Trade Receivables. v) GH¢4,000 outstanding for fuel and light. vi) Rent and business rates paid in advance: GH¢5,000. vii) Market value of finished goods: GH¢382,000.

You are required to prepare the: a. Manufacturing account for the year ending 31st December, 2018. b. Statement of profit or loss for the year ending 31st December, 2018. c. Statement of financial position as at 31st December, 2018. 1

QUESTION 2 The following balances have been extracted from the books of BTJ Company Ltd as at 31st December, 2018 GH¢ Inventories (1st January, 2018): Raw materials Work-in-progress Finished goods Direct wages Indirect wages Royaltie s Electricity and power General factory expenses Maintenance of equipment General office expenses Purchases of raw materials Sales Depreciation of plant and machinery Provision for unrealized profit

26,000 31,600 73,720 572,000 218,400 5,160 52,000 108,000 70,160 115,800 496,000 2,260,000 36,000 16,000

Additional information i) Inventories in hand at 31st December, 2018:

ii) iii) iv)

 Raw materials GH¢19,920  Work in progress GH¢27,800  Finished goods GH¢86,000 Electricity and power and Maintenance expenses are to be apportioned 80% to the factory and 20% to the company's offices. At 31st December, 2018 an electricity bill of GH¢3,200 remained unpaid and maintenance costs paid in advance amounted to GH¢3,040 The company always transfers finished goods from the factory to the warehouse at factory cost plus 25%.

You are required to prepare the: a. Manufacturing account for the year ending 31st December, 2018. b. Statement of profit or loss for the year ending 31st December, 2018.

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