Intermediate: Integrated cost accounting XY Limited commenced trading on 1 February with fully paid issued share capital
Question:
Intermediate: Integrated cost accounting XY Limited commenced trading on 1 February with fully paid issued share capital of £500000, Fixed Assets of £275 000 and Cash at Bank of £225 000. By the end of April, the following transactions had taken place:
1. Purchases on credit from suppliers amounted to £572 500 of which £525 000 was raw materials and £47 500 was for items classified as production overhead.
2. Wages incurred for all staff were £675 000, represented by cash paid £500000 and wage deductions of £175 000 in respect of income tax etc.
3. Payments were made by cheque for the following overhead costs:
4. Issues of raw materials were £180000 to Department A, £192 500 to Department B and £65 000 for production overhead items.
5. Wages incurred were analysed to functions as follows:
6. Production overhead absorbed in the period by Department A was £110000 and by Department B £120000.
7. The production facilities, when not in use, were patrolled by guards from a security firm and £26000 was owing for this service. £39000 was also owed to a firm of manage¬ ment consultants which advises on production procedures; invoices for these two services are to be entered into the accounts.
8.The cost of finished goods completed was
9.Sales on credit were £870000 and the cost of those sales was £700000.
10. Depreciation of productive plant and equip¬ ment was £15 000.
11. Cash received from debtors totalled £520 000.
12. Payments to creditors were £150000.
You are required
(a) to open the ledger accounts at the commence¬ ment of the trading period;
(b) using integrated accounting, to record the transactions for the three months ended 30 April;
(c) to prepare, in vertical format, for presentation to management, (i) a profit statement for the period;
(ii) the balance sheet at 30 April.
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