QUESTION 3 Samzuu Company Limited manufactures bicycle tyres. For the year ended 31/12/2019 the company's cost data is as set below: 1/1/2012 31/12/2019 Inventories: GHS GHS Finished goods Raw materials. 45.300 30,000 10,000 Work in process............... 18,000 Non-current assets acquired during the year: Motor Van at historical value 15,000 Land & Building at historical value 70,000 Plant and equipment at historical value 420,000 During the year the company embarked on the following transactions: Ghe 38,000 Direct labor cost..... Purchase of raw materials. 22, 000 Rent of special equipment for production.... 8,000 Indirect labor....... 5,000 Direct production expense 3.000 Carriage inwards 1,200 Carriage outward 2,000 Raw Material Returns 4,300 Sales commissions... Utilities...... Maintenance of plant and equipment... Supplies, factory.. 2,100 8.000 2.000 1,700 Advertising expense 4,000 Advertising expense 4,000 Additional information. a) The company uses plant & equipment at both the factory and the administration as such expenses on these assets is apportioned 80% to factory and 20% to admin. Repairs and maintenance prepaid is Ghc1,000 as at end of year. b) Manufactured goods are transferred to the trading department at the cost of production c) Utilities are used at the factory and at the administration in the ratio 2/3 goes to the factory and the 1/3 to administration. For the year ended there is Ghc 2,000 accrued on these utilities d) The company's policy is to depreciate Plant & Machinery at 20% and Motor Van 15% per annum e) Sales is twice the cost of sales Required i) Prepare the Production Account for the year ended 31/12/2016 (10 marks) Prepare the income statement of the company for the year. (8 marks) Outline two reasons why companies must provide for Depreciation of Non-current Assets (2 marks) (Total -20 marks)