Question 6 Joytoys Manufacturers had a policy of transferring factory production to the sales department at a profit of 10% on total cost of production of finished goods. The following particulars related to the records of the firm for the period 1 January 2007 to 31 December 2007. Balances 1 January 2007 Raw materials Work in progress R 20 000 Finished goods Direct wages due Purchases returns Direct wages prepaid Electricity due Purchases of raw materials for the year Carriage inwards Customs duty Raw materials costing R10 000 sold 30 000 55 000 400 200 800 245 000 3000 4000 5000 Direct wages paid Electricity paid Insurance, factory Repairs to equipment (factory) 18 000 90 000 3 400 1200 2740 Returns inwards 10 000 Sales 792 000 Land and buildings at cost 200 000 Equipment (factory) at cost 60 000 Provision for unrealised profit on stock of finished goods 5500 Office furniture at cost 14000 Motor vehicles at cost 50 000 Rates (factory) 4 800 Water (75% factory) 4 200 Stationery and printing (factory) 5100 Factory maintenance Postage and telephone (factory) Accumulated depreciation: Other expenses (sundry) office furniture equipment motor vehicles 12 000 1800 5600 24000 15 000 235 240 Further information: 1. Balances 31 December: Raw materials Work in progress Electricity due Direct wages due Finished goods 30.000 24000 600 960 Stock of finished goods had not been taken at 31 December 2007, but the business works on a gross profit mark-up percentage of 50% on turnover. This calculation is based on the price at which the factory delivers manufactured goods to the sales department. 2. Depreciation to be provided: Factory equipment at 10% per annum on cost. Office furniture at 5% per annum on cost. Motor vehicles at 20% per annum on cost. Required Draw up the production cost statement and income statement of the business for the year ended 31 December 2007.