Question 1

The following is the list of balances from the books of Wakaka Manufacturing as at 31 December 2019:

RM

Sales

960,000

Discount received

5,500

Purchases

450,000

Returns Outward (raw materials)

6,500

Returns Inward

4,200

Carriage inwards (raw materials)

3,800

Insurance

25,800

Office salaries

12,000

Machinery repair expenses

4,000

Advertising

8,000

Indirect factory wages

4,100

Production wages

21,000

Water and electricity

5,000

Hire of special machine

12,000

Carriage outwards

5,300

Discount allowed

3,700

Inventories (1 January 2019)

85,000

Allowance for unrealized profit (1 January 2019)

2,700

General expenses

4,600

Royalties

6,000

Machinery (cost)

180,000

Factory building (cost)

300,000

Motor vehicles (at cost)

200,000

Accumulated depreciation (1 January 2019):

- Machinery

49,900

- Factory building

30,000

- Motor vehicles

72,000

Additional Information:

Wakaka Manufacturing produces cheese tarts and also supplies carrot cheese muffins which are purchased from local suppliers.

Market value of completed goods is RM562,632.

Details of purchases are as follows: RM

Purchase of raw materials 350,000

Purchase of carrot cheese muffin 98,000

Purchase of loose tools 2,000

Details of inventories as at 1 January 2019: RM

Raw materials 76,500

Cheese tarts 5,000

Carrot cheese muffin 2,000

Loose tools 1,500

Depreciation expenses for the year are to be charged as follows:

Machinery 15% per annum on net book value

Factory building 2% per annum on cost

Motor vehicles 20% per annum on net book value

There are unpaid supervisors' salaries and electricity expenses amounting to RM5,500 and RM2,400 respectively at the end of the current financial year.

80% of the water and electricity expenses are to be charged to the factory.

Inventories as at 31 December 2019: RM

Raw materials 45,200

Carrot cheese muffin 5,600

Cheese tarts (at market value) 6,800

Work-in-progress (cheese tarts) 4,800 (value at prime cost).

The insurance premium paid is for the period from 1 August 2019 until 31July 2020. 30% of the insurance paid is for the office building.

Required:

A Manufacturing Account for the year ended 31 December 2019.

(12 marks)

An Allowance for Unrealized Profit account.

(4 marks)

Calculate the gross profit of Wakaka Manufacturing for the year ended 31 December 2019.