O LEVEL ACCOUNTING MANUFACTURING ACCOUNT

1 The following information was extracted from the books of CookSmart Ltd, manufacturer
of cooking oil, for the year ended 30 September 2007:

1 Oct 2006 30 Sept 2007

$ $

Y
Inventory – raw materials 18 700 18 100

Inventory – containers and packing 34 100 33 800

N
Inventory – work in progress 100 200

Inventory – finished goods 56 200 50 300

O
Purchases – raw materials 111 400
Purchases – containers and packing 176 200

R
Carriage on raw materials 31 200
Direct factory wages 103 400
Depreciation of factory plant 96 200
Salary of factory supervisor
Sales

REQUIRED
ED 21 800
610 700
M
Prepare the manufacturing account for the year ended 30 September
2007. Show clearly the cost of raw materials consumed, prime cost and cost of pro
duction.
AH
D
JI
SA

SAJID AHMED RONY 1

COMMERCE DEPT
MOB: +8801716738397, +8801816573443
O LEVEL ACCOUNTING MANUFACTURING ACCOUNT
2 Samma Rashid is a manufacturer. The following balances were extracted from the books
on 31 October 2008:

$
Inventory at 1 November 2007:
Raw materials 26 700
Work in progress 7 900
Finished goods 2 450
Purchases of raw materials 213 200

Y
Purchases of finished goods 15 800
Purchases returns of finished goods 900
Sales 525 300

N
Discounts received 5 100
Direct factory wages 145 300
Factory manager’s salary 14 800

O
Indirect factory expenses 23 200
Office salaries 36 200
Office expenses 18 600

R
Distribution costs 23 400
Factory plant and machinery at cost 80 000
Office equipment at cost 24 000
Provision for depreciation of factory plant and machinery 36 000
Provision for depreciation of office equipment 15 360
Receivables
Provision for doubtful debts
Payables
Drawings
ED 44 250
800
19 600
11 600
Bank 3 600 Cr
Capital 80 740
M
Additional information:
AH

1 Inventory at 31 October 2008 was valued as follows:

$
Raw materials 30 640
Work in progress 8 200
Finished goods 2 150

2 At 31 October 2008:
D

Direct factory wages, $12 100, were accrued.

Distribution costs, $1860, were prepaid.
JI

3 Depreciation is to be charged on factory plant and machinery at 25 % per annum using

the straight line method. The residual value of plant and machinery is estimated at
SA

$8000.

4 Depreciation is to be charged on office equipment at 40 % per annum using the

diminishing (reducing) balance method.

No purchases or sales of fixed assets took place within the year.

SAJID AHMED RONY 2

COMMERCE DEPT
MOB: +8801716738397, +8801816573443
O LEVEL ACCOUNTING MANUFACTURING ACCOUNT

5 A cheque for $4800 was received from a receivables on 31 October 2008 but has
been omitted, in error, from the above balances. This is to be entered in the books.

6 The provision for doubtful debts is to be maintained at 2

REQUIRED

Y
(a) Prepare the manufacturing account for the year ended 31 October 2008.
Show clearly cost of raw materials consumed, prime cost and cost of production.

N
(b) Prepare the income statement accounts for the year ended 31 October 2008.

O
(c) Prepare the statement of financial position at 31 October 2008.

R
3 Wang Yee is a manufacturer. The following balances were extracted from his books on
31 January 2010.

$
Inventories 1 February 2009
Raw materials
Work in progress
Finished goods
Purchases of raw materials
ED 14 700
23 570
35 000
75 600
Purchases of finished goods 15 500
M
Direct factory wages 62 140
Rent 28 000
Factory management salaries 31 500
AH

Office salaries 41 600

Revenue (sales) 342 500
Sales returns 1 250
Distribution costs 28 650
Sundry office expenses 9 870
Non-current liability (8% loan – repayable 31 December 2015) 40 000
Finance costs (loan interest) paid 2 400
Property (land and buildings) (cost) 80 000
D

Plant and machinery (cost) 90 000

Office equipment (cost) 30 000
Provision for depreciation of plant and machinery 32 000
JI

Provision for depreciation of office equipment 12 000

Provision for doubtful debts 1 550
Trade receivables (debtors) 45 000
SA

Trade payables (creditors) 60 700

Cash (bank) 33 030 Cr
Capital 110 000
Drawings 17 000

SAJID AHMED RONY 3

COMMERCE DEPT
MOB: +8801716738397, +8801816573443
O LEVEL ACCOUNTING MANUFACTURING ACCOUNT

Additional information:

1 Inventories at 31 January 2010 were valued as follows:

$
Raw materials 16 250
Work in progress 18 780
Finished goods 32 500

Y
2 At 31 January 2010

N
Direct factory wages, $1 120, were accrued.
Sundry office expenses, $630, were prepaid.

O
3 Rent is to be apportioned on the basis of area occupied. Three fifths 冢 35 冣 of the area is
occupied by the factory and two fifths 冢 25 冣 by the offices.

R
4 Depreciation is charged on plant and machinery at 20% per annum using the
diminishing (reducing) balance method.

5 Office equipment is depreciated using the straight-line method at 20% on cost.

ED
Office equipment, $24 000, was purchased on 31 July 2006.
Additional office equipment, $6 000, was purchased on 30 September 2009.
No other changes in non-current (fixed) assets occurred in the year ended
31 January 2010.
Depreciation is calculated for the time assets are held in the business.
M
6 The provision for doubtful debts is to be maintained at 4% of trade receivables (debtors).
AH

REQUIRED

(a) Prepare the manufacturing account of Wang Yee for the year ended 31 January 2010.
Show clearly the cost of raw materials consumed, prime cost and cost of production.
[11]

(b) Prepare the income statement (trading and profit and loss accounts) of Wang Yee for the
year ended 31 January 2010. [15]
D

(c) Prepare the balance sheet of Wang Yee at 31 January 2010. [14]
JI
SA

SAJID AHMED RONY 4

COMMERCE DEPT
MOB: +8801716738397, +8801816573443
O LEVEL ACCOUNTING MANUFACTURING ACCOUNT
4 Yip Sin is a manufacturer. The following balances were extracted from the books on
30 April 2011.
$
Inventory at 1 May 2010
Raw materials 20 900
Work in progress 30 800
Finished goods 40 750
Purchases of raw materials 147 200

Y
Royalties paid 10 000
Direct factory wages 85 960
Factory indirect expenses 23 450

N
Rent 30 000
Factory management salaries 36 000
Office salaries 28 500

O
Revenue 450 000
Advertising 20 940
Distribution costs 18 650
General office expenses 11 300

R
6% Loan – repayable 31 December 2020 50 000
Loan interest paid 1 500
Plant and machinery (cost) 75 000
Office equipment (cost) 24 000
Provisions for depreciation

Provision for doubtful debts

Trade receivables
ED
Plant and machinery
Office equipment
25 000
9 000
2 400
64 000
Trade payables 61 750
M
Bank 4 200 Dr
Capital 100 000
Drawings 25 000
AH
D
JI
SA

SAJID AHMED RONY 5

COMMERCE DEPT
MOB: +8801716738397, +8801816573443
O LEVEL ACCOUNTING MANUFACTURING ACCOUNT

Additional information:
1 Inventory at 30 April 2011
Raw materials 28 $100
Work in progress 34 250
Finished goods 42 350
2 At 30 April 2011

Y
Direct factory wages, $4 040, were accrued.
Advertising, $1 700, was prepaid.
3 Rent is to be apportioned four fifths ( 45 ) to the factory and one fifth ( 15 ) to the

N
administration.
4 A purchase of office equipment, $2 000, had been debited in error to the general

O
office expenses account. No entries have been made in the books to correct the
error.
5 Depreciation is to be charged as follows:

R
Factory plant and machinery at 20% per annum using the diminishing
(reducing) balance method.
Office equipment at 10% on cost using the straight-line method.

6
the end of the year. ED
A full year’s depreciation is to be charged on all non-current assets owned at

The provision for doubtful debts is to be maintained at 5% of trade receivables.

REQUIRED
M
(a) Prepare the manufacturing account of Yip Sin for the year ended 30 April 2011.
Show clearly the prime cost and cost of production.
AH

(b) Prepare the income statement of Yip Sin for the year ended 30 April 2011.

(c) Prepare the statement of financial position of Yip Sin at 30 April 2011.
D
JI
SA

SAJID AHMED RONY 6

COMMERCE DEPT
MOB: +8801716738397, +8801816573443
O LEVEL ACCOUNTING MANUFACTURING ACCOUNT

5 The following balances were extracted from the books of Khan, a manufacturer, on
31 July 2012:
$
Factory equipment (cost) 160 000
Office equipment (cost) 40 000
Provisions for depreciation:
Factory equipment 56 000

Y
Office equipment 26 000
Office equipment disposal account 500 Dr
Bank 9 700 Dr

N
Capital 200 000
Inventory at 1 August 2011:
Raw materials 26 000

O
Work-in-progress 36 000
Finished goods 48 000
Purchases of raw materials 183 000

R
Direct factory expenses 38 000
Indirect factory expenses 19 700
Production wages 164 500
Rent and rates 22 000
Production management salaries 63 000
Office wages and salaries
Revenue
Marketing expenses
Distribution costs
ED 69 500
680 000
27 850
62 000
General office expenses 6 700
8% Loan – repayable 31 December 2025 35 000
M
Loan interest paid 2 100
Provision for doubtful debts 3 000
Trade receivables 75 000
AH

Trade payables 53 550

Additional information at 31 July 2012:

1 Inventory was valued as follows:
$
Raw materials 29 000
D

Work-in-progress 40 000
Finished goods 55 000
2 Production wages, $6500, were accrued. Marketing expenses, $1350, were prepaid.
JI

3 Rent and rates are to be apportioned on the basis of area occupied. Three-quarters of the
area is occupied by the factory and one-quarter by the administration.
SA

4 Contained within the office wages and salaries is $8000 taken by Khan. He also took finished
goods for his own personal use, $1500.
5 Depreciation is to be charged as follows:
Factory equipment at 20% per annum using the diminishing (reducing) balance method
Office equipment at 10% per annum on cost using the straight-line method.
6 The provision for doubtful debts is to be maintained at 6% of trade receivables.

SAJID AHMED RONY 7

COMMERCE DEPT
MOB: +8801716738397, +8801816573443
O LEVEL ACCOUNTING MANUFACTURING ACCOUNT
REQUIRED

(a) Prepare the manufacturing account for the year ended 31 July 2012. Show clearly the
prime cost and cost of production.

(b) Prepare the income statement for the year ended 31 July 2012.

(c) Prepare the statement of financial position at 31 July 2012.

Y
6 Sandar Manufacturing makes a single product.

N
The following balances were extracted from the books at the end of the financial year on
30 September 2012:

O
$
Inventory at 1 October 2011:
Raw materials 17 500

R
Work in progress 24 000
Finished goods 50 000

Purchases of raw materials 82 600

Carriage
Production wages
Office wages
Sundry office expenses
Production manager’s salary
ED 12 000
75 000
35 000
14 500
20 500
Factory rent, rates and power 18 400
M
Royalties 9 000
General factory expenses 15 200
Premises maintenance 40 000
Factory machinery (at cost) 120 000
AH

Factory machinery – provision for depreciation 70 000

Inventory at 30 September 2012:

Raw materials 16 300
Work in progress 29 000
Finished goods 46 000
D

Additional information at 30 September 2012:

1 60% of the carriage relates to raw materials and 40% to goods sold.
JI

2 General factory expenses owing $400.

3 70% of the maintenance relates to the factory premises and 30% to the office premises.
4 Factory machinery is depreciated at the rate of 15% per annum using the diminishing
SA

(reducing) balance method.

REQUIRED

Prepare the manufacturing account for the year ended 30 September 2012. Clearly label
the prime cost and cost of production.

SAJID AHMED RONY 8

COMMERCE DEPT
MOB: +8801716738397, +8801816573443
O LEVEL ACCOUNTING MANUFACTURING ACCOUNT

7 The following balances were extracted from the books of Paul Lee, a manufacturer, on
31 May 2013.
$
Capital 220 000
Drawings 10 800
Factory machinery (cost) 210 000
Office equipment (cost) 60 000
Provision for depreciation:

Y
Factory machinery 75 600
Office equipment 21 600
Inventory at 1 June 2012:

N
Raw materials 33 000
Work in progress 36 000
Finished goods 66 444

O
Purchases of raw materials 133 687
Revenue 426 088
Transport costs 29 400

R
Wages and salaries 140 600
Rent and rates 28 000
Indirect factory expenses 18 423
Lighting and heating 23 140

Bad debts
Loan interest paid
Trade payables
Trade receivables
ED
Selling and administration expenses 10 742
1 000
2 000
43 690
34 400
Bank 658 Cr
M
6% Loan (repayable on 23 June 2018) 50 000

Additional information:
AH

1 Inventory values at 31 May 2013:

$
Raw materials 38 000
Work in progress 42 600
Finished goods 71 200
2 Transport costs are allocated 65% to raw materials and 35% to delivery of finished goods.
D

3 Wages and salaries include $56 000 for production managers’ salaries. The remaining balance
is split 40% direct labour, 35% indirect labour and 25% office salaries.
4 Rent and rates are apportioned factory 80% and office 20%.
JI

5 Lighting and heating are apportioned factory 70% and office 30%.
On 31 May 2013 these were in arrears by $860.
SA

6 On 31 May 2013 selling and administration expenses had been prepaid by $230.
7 A provision for doubtful debts, representing 4% of trade receivables, is to be created.

8 Factory machinery is depreciated at 20% per annum using the diminishing (reducing) balance
method. Office equipment is depreciated at 12% per annum on cost.

SAJID AHMED RONY 9

COMMERCE DEPT
MOB: +8801716738397, +8801816573443
O LEVEL ACCOUNTING MANUFACTURING ACCOUNT

REQUIRED

(a) Prepare the manufacturing account for the year ended 31 May 2013. [15]

(b) Prepare the income statement for the year ended 31 May 2013. [13]

(c) Prepare the balance sheet (statement of financial position) at 31 May 2013. [12]

Y
8 Cadmore Limited is a manufacturing business. The following information is available for the month

N
of April 2014.

O
Inventory at 1 April 2014:
Raw materials 10 830
Work in progress 12 700
Finished goods 25 800

R
Factory wages 60 690
Office wages 24 750
Purchases of raw materials 80 670
Depreciation of factory machinery 7 000

ED
Depreciation of office equipment
Rent of factory building
Rent of office building
Royalties
Factory management salaries
5 000
2 000
1 000
7 500
10 750
Office management salaries 32 000
M
Revenue 290 450
Insurance 1 250
General expenses 8 000
AH

Additional information

1 Inventory at 30 April 2014:

Raw materials 12 400
Work in progress 9 980
Finished goods 24 700
D

2 Insurance is to be apportioned 80% to the factory, 20% to the office.

3 General expenses: $5000 relate to the factory and $3000 to the office.
JI

REQUIRED
SA

(a) (i) Explain the term direct cost.

(ii) State two direct costs incurred by Cadmore Limited.

(b) Prepare the manufacturing account of Cadmore Limited for the month ended 30 April 2014.

SAJID AHMED RONY 10

COMMERCE DEPT
MOB: +8801716738397, +8801816573443
O LEVEL ACCOUNTING MANUFACTURING ACCOUNT

Y
N
O
R
ED
M
AH
D
JI
SA

SAJID AHMED RONY 11

COMMERCE DEPT
MOB: +8801716738397, +8801816573443
O LEVEL ACCOUNTING MANUFACTURING ACCOUNT

Y
N
O
R
ED
M
AH
D
JI
SA

SAJID AHMED RONY 12

COMMERCE DEPT
MOB: +8801716738397, +8801816573443
O LEVEL ACCOUNTING MANUFACTURING ACCOUNT

Y
N
O
R
ED
M
AH
D
JI
SA

SAJID AHMED RONY 13

COMMERCE DEPT
MOB: +8801716738397, +8801816573443
O LEVEL ACCOUNTING MANUFACTURING ACCOUNT

Y
N
O
R
ED
M
AH
D
JI
SA

SAJID AHMED RONY 14

COMMERCE DEPT
MOB: +8801716738397, +8801816573443