QUESTION 3 (31 Marks ) The following is available for Sparkle Ltd Manufacturers for the year ended 28 February 2019: Balances 01 March 2018 28 February 2019 Direct material 14 000 19 000 Work in process 6 000 40 000 Finished products 1 000 2 700 Rent paid in advance - factory 1 000 Water & Electricity in arrears - factory 700 Transaction occurred during the year - all cash, all factory Water & electricity - factory 20 000 Indirect wages - factory 10 000 Material purchased cash (direct) 60 000 Depreciation factory 8 000 Indirect material purchased cash 14 000 Indirect material used 12 000 Direct labour 75 000 Other overheads paid 12 000 Insurance-factory 14 000 Rent-factory 28 000 Direct material used 55 000 Additional information: Overheads are allocated at 200% of direct material cost Rent in arrears at the end of 2019 was NS 800 Water & electricity in arrears at the end was NS 600 Overhead applied are recovered against cost of sales Finished products are transferred to the sales department at cost price plus 20% You are required to: a) The Manufacturing Cost Statement for Sparkle Ltd Manufacturers for the year ended 28 February 2019 (14 marks) b) Prepare the following general ledger account for the year ended 28 February 2019 Manufacturing overhead account (7 marks) C) Prepare the extracted statement of financial position as at 28 February 2021 only showing inventory (5 marks) C) Explain the concept of unrealised profits and when it may be applied. (5 marks) QUESTION 3 (31 Marks ) The following is available for Sparkle Ltd Manufacturers for the year ended 28 February 2019: Balances 01 March 2018 28 February 2019 Direct material 14 000 19 000 Work in process 6 000 40 000 Finished products 1 000 2 700 Rent paid in advance - factory 1 000 Water & Electricity in arrears - factory 700 Transaction occurred during the year - all cash, all factory Water & electricity - factory 20 000 Indirect wages - factory 10 000 Material purchased cash (direct) 60 000 Depreciation factory 8 000 Indirect material purchased cash 14 000 Indirect material used 12 000 Direct labour 75 000 Other overheads paid 12 000 Insurance-factory 14 000 Rent-factory 28 000 Direct material used 55 000 Additional information: Overheads are allocated at 200% of direct material cost Rent in arrears at the end of 2019 was NS 800 Water & electricity in arrears at the end was NS 600 Overhead applied are recovered against cost of sales Finished products are transferred to the sales department at cost price plus 20% You are required to: a) The Manufacturing Cost Statement for Sparkle Ltd Manufacturers for the year ended 28 February 2019 (14 marks) b) Prepare the following general ledger account for the year ended 28 February 2019 Manufacturing overhead account (7 marks) C) Prepare the extracted statement of financial position as at 28 February 2021 only showing inventory (5 marks) C) Explain the concept of unrealised profits and when it may be applied