• IM4.1 Intermediate: Integrated cost accounting. XY Limited commenced trading on 1 February with fully paid issued share capital of £500,000, 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 £500,000 and wage deductions of £175,000 in respect of income tax etc. 3 Payments were made by cheque for the following overhead costs: (£) Production 20,000 Selling 40,000 Administration 25,000 4 Issues of raw materials were £180,000 to Department A, £192,500 to Department B and £65,000 for production overhead items. 5 Wages incurred were analysed to functions as follows: (£) Work in progress – Department A 300,000 Work in progress – Department B 260,000 Production overhead 42,500 Selling overhead 47,500 Administration overhead 25,000 675,000 6 Production overhead absorbed in the period by Department A was £110,000 and by Department B £120,000. 7 The production facilities, when not in use, were patrolled by guards from a security firm and £26,000 was owing for this service. A sum of £39,000 was also owed to a firm of management 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: Department A Department B (£) (£) Direct labour 290,000 255,000 Direct materials 175,000 185,000 Production overhead 105,000 115,000 570,000 555,000 9 Sales on credit were £870,000 and the cost of those sales was £700,000. 10 Depreciation of productive plant and equipment was £15,000. 11 Cash received from debtors totalled £520,000. 12 Payments to creditors were £150,000. Required: (a) Open the ledger accounts at the commencement of the trading period. (b) Using integrated accounting, record the transactions for the three months ended 30 April. (c) Prepare, in vertical format, for presentation to management: (i) a profit statement for the period; (ii) the balance sheet at 30 April.