7. The following was extracted from the books of Moniya manufacturing Entreprises for the year ended 31st December, 2010.
₦
Stock on 1st January:
Raw materials 56,000
Finished goods 48,000
Work-in-progress 2,000
Purchase of raw materials 387,000
Manufacturing wages 26,300
Rent and Rates 52,000
Factory expenses 15,500
Depreciation 7,500
Salaries and wages 49, 000
Selling expenses 107,500
Sales 970,000
Additional information:
(i) Stock – 31st December:
Raw materials 42,500
Finished goods 34,800
Work-in-progress 1,200
(ii) Goods manufactured are transferred to sales department at the current market value of
₦ 861,900
(iii) Rent and rates are apportioned ⅘ to factor y and ⅕ to office.
(iv) Salaries and wages include ₦ 21,000 for factory supervision.
(v) On 1st January, 2010, there was a provision of doubtful debts of ₦ 3,600 which was to be adjusted to 5% of debtors ₦ 82,000 31st December, 2010.
You are required to prepare:
- Manufacturing account for the year ended 31st December, 2010.
- Trading profit and loss account for the same period.
Suggested answer
MONNA MANUFACTURING ENTERPRISE
Manufacturing Account for the year ended 31st December, 2010
Raw materials ₦ ₦
Opening stock 56,000
Add purchases 287,000
443,000
Less closing stock 42,500
Cost of raw materials consumed 400,500
Manufacturing wages 26,300
Prime cost 426,800
Factory Overheads
Factory rent and rates (4/5*52,000) 41,600
Factory expenses 15,500
Depreciation of machinery 7,500
Factory supervision 21,000 85,600
512,400
Add Work-in-process (1/1/2010) 2,000
514,400
Less Work-in-process (31/12/2010) 1,200
Cost of Production 513,200
Manufacturing Profit (861,900-513,200) 348,700
Cost Market Value 861,900
(b) Trading, Profit and Loss Account for the year ended 31st December, 2010
₦ ₦
Sales 970,000
Less cost of sales:
Opening stock 48,000
Add market value 861,900
909,900
Less closing stock 34,800 875,100
Gross Profit 94,900
Manufacturing Profit 384,700
443,600
Less Operating Expenses:
Rent and rates (1/5* 52,000) 10,400
Salaries and wages (49,000-21,000) 28,000
Selling expenses 107,500
Provision of doubtful debts
(5% x 82,000-3,600) 500 146,400
Net Profit 297,200
8. Yemoja did keep a complete set of double entry but have been able to provide you with the following information as at 31st December, 2010.
1st January, 2010 31st December, 2010
D D
Machinery 450, 000 505,000
Stock 216,000 246,500
Accrued expenses 12,000 15,000
Trade owing – 25,000
Trade Creditors 86,000 29,400
Prepaid rates – 5,000
Trade Debtors 162,800 186,000
Additional Information:
(i) Summary of his statement of account is;
D
Opening bank balance 26,200
Loan received 100,000
Cash sales banked 1,665,600
Cheques received from debtors 816,200
Cheques paid to creditors 1,701,600
Wages paid 266,700
Rent paid 25,000
Expenses paid 162,600
New machinery acquired 100,000
Drawings 208,000
Closing bank balance 69,100
(ii) Debtors valuing D 42,000 are bad and irrecoverable
(iii) Discount allowed totaled D 31,500
(iv) Discount receivable totaled D 65,400
You are required to prepare:
(a) Opening statement of affairs
(b) Trading, Profit and Loss account for the year ended 31st December, 2010.
(c) A balance sheet as at that date.
Suggested answer
YEMOJA
(a) Statement of affairs as at 1st January, 2010
D D D
Machinery 450,000
Current Assets:
Stock 216,000
Trade debtors 162,800
Bank 26,000
405,000
Less Current Liabilities:
Trade Creditors 86,000
Accrued expenses 12,000 98,000 307,000
757,000
Capital as at 1st January, 2010 757,000
(b) Trading, Profit and loss Account for the ended 31st December, 2010
D D
Sales(Wv) 2,578,500
Less cost of sales:
Opening stock 216,000
Add Purchases (Wiv) 1,773,400
1,989,400
Less closing stock 246,500
1,742,700
Wages 266,700 2,009,900
Gross Profit 568,900
Discount Allowed 65,400
634,300
Less Operating Expenses:
Expenses (Wi) 165,600
Rent and Rates(25,000 + 25,000) 50,000
Discount allowed 31,500
Bad debts 42,000
Depreciation (Wvi) 45,000 334,100
Net Profit 300,000
(c) Yemoja: Balance sheet as at 31st December, 2010.
Cost Acc Depre. NBV
Fixed Assets D D D
Machinery 550,000 45,000 505,000
Current Assets
Stock 246,500
Trade detors 186,000
Prepaid rates 5,000
Bank 69,100
506,600
Current liabilities:
Trade creditors 92,400
Accrued Expenses 15,000
Rent owing 25,000 132400
Net Current Assets 374,200
Net Total Assets 879,200
Financed by:
Capital 757,000
Add Net Profit 300,200
1,057,200
Less Drawings 208,000
849,200
Long term liabilities
Loan 100,000
Capital Employed 949,200
Workings
(i) Expenses Account
D D
Bank 162,600 Bal. b/d 12,000
Bal c/d 15,000 Profit & loss 165,600
177,600 177,600
Bal c/d 15,000
(ii) Total Debtors Account
D D
Bank 162,800 Bank 816,000
Bal c/d 912,900 Dad debt 42,000
Discount allow 31,500
Bal c/d 186,000
1,075,700 1,075,700
(iii) Total Creditors Account (iv) Sales Account
D D D D
Bank 1,701,600 Bal. b/d 86,000 Bal. c/d 2,578,500 Debtors 912,900
Discount Rec. 65,400 Purchase 1,773,400 Bank 1,665,600
Bal. c/d 92,400 2,578,500 2,578,500
1,859,400 1,859,400
Bad b/d 92,400
(v) Machinery Account
D D
Bal b/d 450,000 Depreciation 45,000
Bank 100,000 Bal c/d 505,000
550,000 550,000
Bal. b/d 505,000
(Vi) Bank Account
D D
Bal b/d 26,200 Creditors 1,701,600
Loan 100,000 Wages 266,700
Sales 1,665,000 Rent 25,000
Debtors 816,200 Expenses 162,600
Machinery 100,000
Drawings 20,800
Bal c/d 69,100
2,608,000 2,533,000
Note:
You will notice that the balance sheet did not balance. This is because the bank account count not balance. The was mistake in the bank account. The credit side of the bank account was reduced by D 75,000.
9. Appiah and Sons limited, a retail organisation in Kumasi open a branch at Bekwai. Ledger accounts are kept at the branch where goods for the branch are invoiced at cost plus 33⅓%.The follwing infrmation had been extrcted from the books of the branch for the year ended december 31, 2011.
GH₵
Credit Sales 685,000
Cash Sales 260,000
Goods received from head office 900,000
Cheques from debtors 426,000
Goods returned to head office 24,000
Return from debtors 20,000
Branch debtors (1/1/ 11) 98,000
Branch stock (1/1/11) 280,000
Discount allowed 73,000
Dishonoured cheques 55,000
You are required to prepare:
(a) Branch stock Account; (b) Branch Stock Adjusted Account;
(c) Goods sent to Branch Account; (d) Branch Debtors Account.
Suggested answer;
APPIAH AND SONS LIMITED
(a) Branch Stock Account
GH₵ GH₵
Bal. b/d 280,000 Credit sales 685,000
Goods sent to branch 900,000 Cash sales 260,000
Branch Debtors- Goods returned 20,000 Goods returns 24,000
Bal. c/d 231,000
1,20,000 1,200,000
Balance b/d 231,000
(b) Goods Sent to Branch
GH₵ GH₵
Balance b/d 18,000 Branch stock 675,000
Generating trading account 657,000 (500,000 x ¾)
675,000 675,000
(c) Branch Stock Adjustment Account
GH₵ GH₵
Goods returns 6,000 Balance b/d 70,000
(1/4 x 24,000) (280,000 x ¼)
Branch Profit and Loss 231,250 Branch stock:
Bal c/d (1/4 x 231.000) 57,750 Goods sent (1/4 x 900,000) 225,000
295,000 295,000
Balancs b/d 57,750
(d) Branch Debtors Account
GH₵ GH₵
Balance b/d 98,000 Bank 426,000
Branch Stock- Credit sales 685,000 Goods returns 20,000
Dishonoured cheques 55,000 Discount allowed 73,000
Balance c/d 319,000
838,000 838,000
Balance b/d 319,000
Note: Since the goods are invoice at ost plus 33⅓%it means that mark-up is ⅓ or 100/300 and margin would be ¼ or 100/400. The amount in the question are at invoiced pices because they are in the books of the brank.
