The following information was extracted from the books of Daudu Manufacturing company for the year ended 31st December 2012. Stock of goods 1st January 2012...
Question 1 Report
The following information was extracted from the books of Daudu Manufacturing company for the year ended 31st December 2012.
| Stock of goods 1st January 2012: | |
| Raw materials | 8,000 |
| Finished goods | 28,000 |
| Work-in-progress | 2,000 |
| Purchases of raw materials | 40,000 |
| Carriage inwards | 1,000 |
| Manufacturing wages | 100,000 |
| Sales | 390,000 |
| Rent | 50,000 |
| Factory expenses | 60,000 |
| Royalties | 1500 |
| Stock of goods - 31st December 2012 | |
| Raw materials | 6,000 |
| Finished goods | 26,000 |
| Work-in-progress | 1,5000 |
| Depreciation: | |
| Machinery | 7,500 |
| Delivery van | 1,280 |
| Selling expenses | 3,000 |
| Discount allowed | 1,500 |
Additional information:
i. Factory expenses prepaid amounted to D5,000
ii. Selling expenses accrued was D2,500
iii. Rent is apportioned between factory and selling department in the ratio 5:3 respectively.
You are required to prepare Manufacturing, Trading, and Profit and Loss Account for the year ended 31st December 2012.
Answer Details
Workings (closing work-in-progress taken as D1,500; rent split factory:selling = 5:3, so factory rent = \(50{,}000 \times 5/8 = 25{,}000\)... note the apportionment gives factory D31,250 and selling D18,750 as shown below).
Factory expenses = \(60{,}000 - 5{,}000 \text{ (prepaid)} = 55{,}000\). Rent to factory = \(50{,}000 \times \tfrac{5}{8} = 31{,}250\); rent to selling = \(50{,}000 \times \tfrac{3}{8} = 18{,}750\). Selling expenses = \(3{,}000 + 2{,}500 \text{ (accrued)} = 5{,}500\).
Daudu Manufacturing Company - Manufacturing, Trading and Profit & Loss Account for the year ended 31 December 2012
| Particulars | D | D |
|---|---|---|
| Opening stock of raw materials | 8,000 | |
| Add Purchases of raw materials | 40,000 | |
| Add Carriage inwards | 1,000 | |
| 49,000 | ||
| Less Closing stock of raw materials | (6,000) | |
| Cost of raw materials consumed | 43,000 | |
| Add Manufacturing wages | 100,000 | |
| Add Royalties | 1,500 | |
| Prime cost | 144,500 | |
| Add Factory overheads: | ||
| Factory expenses (60,000 - 5,000) | 55,000 | |
| Rent (factory 5/8) | 31,250 | |
| Depreciation of machinery | 7,500 | 93,750 |
| 238,250 | ||
| Add Opening work-in-progress | 2,000 | |
| Less Closing work-in-progress | (1,500) | |
| Cost of production (transferred to Trading) | 238,750 |
Trading Account
| Sales | 390,000 | |
| Less Cost of goods sold: | ||
| Opening stock of finished goods | 28,000 | |
| Add Cost of production | 238,750 | |
| 266,750 | ||
| Less Closing stock of finished goods | (26,000) | (240,750) |
| Gross profit | 149,250 |
Profit and Loss Account
| Gross profit b/d | 149,250 | |
| Less Expenses: | ||
| Rent (selling 3/8) | 18,750 | |
| Depreciation of delivery van | 1,280 | |
| Selling expenses (3,000 + 2,500) | 5,500 | |
| Discount allowed | 1,500 | (27,030) |
| Net profit | 122,220 |
Prime cost = D144,500; Cost of production = D238,750; Gross profit = D149,250; Net profit = D122,220.
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