Question
MODULE:Financial Accounting [ACT 100] DATE:March 30, 2016 (Due Date) TIME:6:00 pm (Time Due) Question 1 The following Trial Balance was extracted from the books of
MODULE:Financial Accounting [ACT 100]
DATE:March 30, 2016 (Due Date)
TIME:6:00 pm (Time Due)
Question 1
The following Trial Balance was extracted from the books of General Production Company Ltd on December 31, 2011 and presented to you the Financial Accountant:
Trial Balance
Details/Accounts | Dr $ | Cr $ |
Purchases of direct raw materials | 25,200,000 | |
Stock of direct raw materials January 1,2011 | 5,500,000 | |
Wages paid to manufacture goods | 12,000,000 | |
Insurance | 2,000,000 | |
Electricity | 1,450,000 | |
Cash at bank | 28,000,000 | |
Accounts payable | 3,500,000 | |
Discounts | 450,000 | 500,000 |
Return of direct raw materials | 200,000 | |
Cash in hand | 600,000 | |
Work-in-progress January 1,2011 | 3,000,000 | |
Salaries | 3,500,000 | |
Returns inward of finished goods | 300,000 | |
Carriage inwards of direct raw materials | 1,000,000 | |
Indirect raw materials January 1,2011 | 2,500,000 | |
Accounts receivable | 7,500,000 | |
Provision for bad and doubtful debts | 75,000 | |
Machinery | 10,000,000 | |
Accumulated depreciation machinery | 4,000,000 | |
Office furniture | 2,000,000 | |
Purchase of indirect raw materials | 2,500,000 | |
Motor vehicles | 14,000,000 | |
Accumulated depreciation motor vehicles | 2,800,000 | |
Finished goods January 1, 2011 | 6,000,000 | |
Provision for unrealized profit | 1,000,000 | |
Indirect wages | 3,000,000 | |
Rent payable | 2,400,000 | |
Capital | 58,175,000 | |
Stationery | 250,000 | |
Bad debts | 200,000 | |
Direct expenses | 4,000,000 | |
Sales | 70,300,000 | |
Carriage outwards | 2,200,000 | |
Rent receivable | 500,000 | |
Salesmen commission | 1,500,000 | |
141,050,000 | 141,050,000 |
Notes:
(i)The company adds 20% mark-up to its cost of production.
(ii)The provision for bad and doubtful debts is to be increased to 1.5% of debtors.
(iii)$200,000 of the insurance relates to 2012.
(iv)Rent payable is to be apportioned 75% factory; 25% office.
(v)Depreciation is to be charged as follows: Machinery 10% Reducing balance; Motor vehicles 10% Straight line; Office furniture 10% on cost.
(vi)On December 31, 2011, $50,000 was outstanding for stationery.
(vii)Stocks as at December 31, 2011 were as follows: Direct raw materials, $4,500,000; Work-in-progress, $4,000,000; Finished goods, $4,500,000; Indirect raw materials, $2,000,000
(viii)1/5 of the amount paid for insurance is to be allocated to the office, while 60% of the electricity relates to the factory.
(ix)The motor vehicles are used equally between the factory and the office.
Required:
(a)Prepare Manufacturing, Trading and Profit and Loss Account for the year ending December 31, 2011. (28 marks)
(b)A Balance Sheet as at December 31, 2011. (12 marks)
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