These balances and totals are from Mark and Brake Ltd who manufactures sport equipment: Inventory: 1 March 20x7 Raw material 14 400 Work-in progress (WIP) 9 500 Finished goods 52 000 Delivery vehicle at cost 19 000 Plant and machinery at cost 120 000 Office furniture at cost 6 000 Bank 11 400 Accumulated depreciation on 1 March 20x7: Delivery vehicles 3 800 Plant and Machinery 36 000 Office furniture 1 200 Water and electricity: Factory 6 200 Office 320 Purchase of raw material 144 000 Customs duty on raw material 3 400 Freight in on raw material 7 200 Insurance paid : Factory 2 520 Office 840 Insurance paid in advance 1 March 20x7 Factory 960 Office 260 Allowance for bad debts on 1 March 20x7 830 Account receivable 16 600 Factory wages 73 000 Indirect labour 9 600 Salaries: Sale personnel 17 40 Office personnel 11 600 Factory overheads 4 560 Stationary 760 Sales 260 400 Page 19 of 21 Additional information: 1. Inventory on hand 28 February 20x8: Raw material R13 400 Work in- progress R10 700 Finished goods R60 000 2. Depreciation should be provided for on the reducing-balance method: Delivery vehicle 20% p.a. Plant and machinery 15%p.a. Office furniture 5%p.a 3. Insurance is payable one year in advance on 1 July. 4. Finished goods are transferred from the factory to the sales department at production cost plus 25% You are required to: Prepare a work in progress inventory account for the year ended 28 February 20x8. (10 marks) PART 2 (20 marks: 36 minutes) Mr Len Naidoo, the owner of Widget Distributors, has in the past imported widgets. However, from 1 January 20x8, he decided to manufacture the widgets himself. Here is the abridged statement of financial position of Widget Distributors at 31 December 20x7: Capital Len Naidoo 2 000 Inventory (1 000 units) 800 Accounts payable 1 000 Accounts receivable 700 Bank 1 500 3 000 3 000 Page 20 of 21 From a scrutiny of vouchers and other documents you find that these transaction have taken place during the year ended 31 December 20x8: 1. Cash transaction as per the cash book: Receipts: Capital introduced by Mr Naidoo R10 000 Accounts receivable R6 000 Cash sales R2 000 Payments: Accounts payable R7 000 Drawings- Mr Naidoo R2 500 Wages paid to manufacturing staff R3 000 Rent for factory R1 200 Hire of specialised machinery R1 300 2. Amount owing, totalling R3 500 were written off as bad debts. 3. 5 500 units were sold. 4. A royalty of 10 cents per completed unit manufactured during the year is payable in arears on 1 January of the following year. 5. In addition, the following balance at 31 December 20x8 were determined: Accounts payable raw material R3 500 Accounts receivable trade debtors R1 200 Inventory: Finished goods (4 500 units) R? Work in progress (2 000 units) R? Raw material R2 500 6. Inventory is valued at factory cost using the first in first out basis. 7. Work in progress at 31 December 20x8 was 75% complete in respect of raw material, and 45% complete in respect of direct labour and overheads. You are required to: 1) Prepare the statement of the cost of goods manufactured for Widget distributors for the year ended 31 December 20x8. (15 marks) 2) Calculate the gross profit of Widget Distributors for the year ended 31 December 20x8. (5 marks)