Question 1

Tictac Ltd. Manufactured and sold sports shoes. It had also decided to import genuine leather shoes to meet the needs of the local consumers. The following balances were extracted from the books on 31 December 1990:

$

Carriage inwards: shoes imported 62,300

Carriage outwards 6,500

Electricity 5,600

Factory expenses 44,000

Manufacturing wages 137,500

Office expenses 19,700

Office furniture and fixtures at cost 121,000

Opening stocks:

Finished goods at cost 52,300

Work in progress at cost 23,800

Plant and machinery at cost 308,000

Purchases: shoes imported 352,000

Rates and insurance 8,300

Raw materials consumed 354,900

Returns inwards: Shoes manufactured 13,400

Office salaries 146,800

Sales:

Shoes manufactured 925,300

Shoes imported 538,600

Selling expenses 36,200

Additional information:

(i) Closing stocks valued at cost: $

Shoes manufactured -

Shoes imported 55,400

Work in progress 36,700

(ii) From 1 January 1990 onwards, the manufactured goods are transferred to the trading account at factory cost plus 25% profit loading.

(iii) Depreciation is to be provided at 10% on cost for office furniture and fixtures and plant and machinery.

(iv) The expenses on electricity, and rates and insurance are chargeable three-fifths to the factory and the balance to the office.

(v) On 1 July 1990, the company issued for cash $300,000 10% debentures repayable at the end of June 1995.

(vi) On 31 December 1990, accrued office salaries amounted to $13,200 and the prepaid insurance premium was $2,300.

REQUIRED:

Prepare for Tictac Ltd. The following accounts for the year ended 31 December 1990:

(a) A manufacturing account showing the prime cost and the total cost of

manufactured shoes transferred to the trading account.

(b) A trading and profit and loss account showing separately the gross

profit on sales of manufactured shoes and imported shoes.