Question

Manufacturing Account

The following details were extracted from the books of Konongo Industries Limited a manufacturer of soap for the year ended 31^st March, 1999

                                                                                                         GH¢

Opening Stocks: Raw materials                                                          785,000

                            Work-In-Progress (WIP) 216,000

                              Finished Goods                                                    432,750

Purchases                                                                                       1,871,215

Sales                                                                                              4,343,680

Return Outwards                                                                                52,100

Return Inwards                                                                                   18,350

Carriage Inwards                                                                                74,180

Discount Allowed                                                                               15,015

Discount Received                                                                             46,780

Plant and Machinery at cost                                                            1,850,000

Freehold Building at cost                                                                 1,610,000

Furniture and Fittings at cost 318,000

Indirect Wages                                                                                  127,125

Lighting and Heating 74,300

Insurance                                                                                            16,720

Rates                                                                                                  18,000

Salaries-selling and administration 342,180

Motor Vehicle at cost                                                                         1,000,000

Direct wages                                                                                       692,750

Additional Information:

1. Depreciation was charged on cost at the following rates:

Plant and machinery                10% per annum

Furniture and Fittings             12.5% per annum

Freehold Building                   10% per annum

Motor Vehicles                       20% per annum

2. The proportion of use of the fixed assets as at 31^st March, 1999 by the factory and office was as follows: Factory Office

Plant and machinery                            90% 10%

Furniture and Fittings                         25%                                                     75%

Freehold Building                               80%                                                     20%

Motor Vehicles                                   ***                                                      100%

3. The insurance expense was in respect of the plant and machinery.
4. Light and heating and rates were in respect of the freehold building.
5. Closing stocks of raw material GH¢539,400; closing WIP GH¢363,910 and closing finished goods GH¢244,840

Required: prepare manufacturing, trading and profit and loss account for the year ended 31^st March,1999.

Answer 1

ALREADY SOLVED

In the books of Konongo Industries Limited

Manufacturing, trading and profit and loss account for the year ended 31^st March,1999.

Particulars	Amount (GH¢)	Amount (GH¢)	Particulars	Amount (GH¢)	Amount (GH¢)
Opening Stock			Sales	4343680
Raw material	785000		(-) Returns Inward	(18350)
Work -in-Progress	216000		(-) Discount Allowed	(15015)	4310315
Finished Goods	432750	1433750
Purchases	1871215		Closing Stock
(-) Returns Outward	(52100)		Raw material	539400
(-) Discount Received	(46780)	1772335	Work -in-Progress	363910
Carriage Inward		74180	Finished Goods	244840	1148150
Direct Wages		692750
Insurance		16720
Depreciation		305237.5
Gross Profit		1163492.5
		5458465			5458465
Indirect Wages		127215	Gross Profit		1163492.5
Lighting & Heating		74300
Rates		18000
Salaries - Selling & Administration		342180
Depreciation		280512.5
Net Profit		321285
TOTAL		1163492.53	TOTAL		1163492.5

NOTES :

1. Depreciation

Assets	Cost (GH¢)	Depreciation %	Depreciation (GH¢)	% of Factory	Factory (GH¢)	% of Office	Office (GH¢)
Plant and machinery	1850000	10	185000	90	166500	10	18500
Furniture and Fittings	318000	12.5	39750	25	9937.5	75	29812.5
Freehold Building	1610000	10	161000	80	128800	20	32200
Motor Vehicles	1000000	20	200000	-	0	100	200000
TOTAL	4778000		585750		305237.5		280512.5

2. Indirect wages are not attributable for Production

3.lighting and Heating & Rates of free hold buiding are not attributable for Production (Manufacturing & Trading Account.

ALTERNATIVELY:

GH Konongo Industries Manufacturing account For the Year ended March 31, 1999 Particulars GH Opening Stock of Raw Material 7,85,000 Add: Purchase of Raw Material 18,71,215 Add: Carriage inwards 74,180 27,30,395 Less: Return outwards 52,100 26,78,295 Less: Closing stock of Raw Material 5,39,400 Cost of Direct Material Add: Direct wages Prime Cost Add: Factory Overhead expenses Lighting and Heating (74,300 x 80%) 59,440 Insurance (16,720 x 90%) 15,048 Rates (18,000 x 80%) 14,400 Depreciation on Plant & Machinery 1,66,500 Depreciation on Furniture and Fittings 9,938 Depreciation on Freeheld Buildings 1,28,800 Total Factory Overhead expenses 21,38,895 6,92,750 28,31,645 Add: Opening Stock of WIP 3,94,126 32,25,771 2,16,000 34,41,771 3,63,910 30,77,861 Less: Closing Stock of WIP Cost of Production

Calculation of Depreciation Assets Plant & Machinery Furniture and Fittings Freehold Buildings Motor Vehicles Amount Rate 18,50,000 3,18,000 16,10,000 10,00,000 10% 12.50% 10% 20% Depreciation 1,85,000 39,750 1,61,000 2,00,000 Apportionment of Depreciation between Factory and Office Factory Office Assets Total Depreciation % Plant & Machinery Furniture and Fittings Freehold Buildings Motor Vehicles 1,85,000 39,750 1,61,000 2,00,000 90% 25% 80% 0% Depreciation 1,66,500 9,938 1,28,800 % 10% 75% 20% 100% Depreciation 18,500 29,813 32,200 2,00,000

GH 43,43,680 18,350 43,25,330 Trading Account Particulars GH Sale of Finished Goods Less: Return Inwards Net Sale Less: Cost of goods sold Opening Stock of finished Goods 4,32,750 Add: Cost of Production 30,77,861 Cost of goods available for Sale 35,10,611 Less: Closing stock of finished goods 2,44,840 Gross Profit (loss) 32,65,771 10,59,560 GH 10,59,560 Profit & Loss Account For the Year ended March 31, 1999 Particulars GH Gross Profit (loss) Less: Expenses Indirect wages 1,27,125 Discount allowed 15,015 Discount Received -46,780 Lighting and Heating (74,300 x 20%) 14,860 Insurance (16,720 x 10%) 1,672 Rates (18,000 x 20%) 3,600 Depreciation on Plant & Machinery 18,500 Depreciation on Furniture and Fittings 29,813 Depreciation on Freeheld Buildings 32,200 Depreciation on Motor Vehicle 2,00,000 Salaries - selling and administration 3,42,180 Total expenses Net Profit 7,38,185 3,21,375