90.2K

Verified Solution

Link Copied!

Question 4 [unit 5: obj. 1;4]

HanLue Brothers, a manufacturing company, produces the following balances from its books at 30th September 2017:

	$
Stocks at 1 October 2016:
Raw materials	7,450
Work-in-progress(factory cost)	5,330
Finished goods(transfer value)	12,110
Purchases of raw materials	128,740
Purchases returns	310
Direct expenses	3,280
Return inwards	1,215
Carriage inwards	1,055
Rates	5,250
Light, heat and power	3,270
Direct Wages	187,240
Indirect Wages	14,320
Telephone	890
Factory repairs	2,215
Insurances	1,420
Factory salaries	38,000
Office salaries	24,000
Sales salaries	27,435
Plant & machinery ( at cost)	160,000
Provision for depreciation of plant & machinery at 1 October 2016	64,000
Bad debts (written off)	325
Bank	3,115
Sales	721,560
Furniture & equipment (at cost)
-Factory	42,000
-Office	48,000
Provision for depreciation of furniture & equipment at 1 October 2016
-Factory	8,400
-Office	9,600
Office machine at cost	12,000
Provision for depreciation on office machine	3,000
Carriage outwards	205
Discount allowed	950
Land	500,000
Capital	288,045
Debtors	18,526
Creditors	11,756
Bank Loan	175,000

Additional information:

(1) Closing stocks at 30 September 2017 are as follows:

	$
Raw materials	6,325
Work-in-progress(factory cost)	6,105
Finished goods(transfer value)	15,225

(2) Prepayments at 30 September 2017:

	$
Rates	450
Insurance	220

(3) Accruals at 30 September 2017:

	$
Direct wages	1,220
Telephone	70
Light, heat and power	210

(4) At 30 September 2017, depreciation is to be provided as follows:

	Per year on cost
Plant and machinery	20%
Furniture and equipment	10%

(5) Expenses are to be apportioned to the factory as follows:

	$
Rates	4 / 5
Insurances	3 / 4
Telephone	2 / 3
Light, heat and power	3 / 4

(6) It is the policy of the company to transfer goods manufactured to the warehouse at factory cost plus 15%

Required:

1. Prepare in vertical format, Manufacturing and Trading and Profit and Loss Accounts HanLue Brothers for the year ended 30 September 2017 and a Balance Sheet as at that date. Show all workings. (26 marks)

2. Explain two (2) differences between accounting for a manufacturing and retailing entity. (4 marks)

(total 30 marks)

Answer & Explanation Solved by verified expert

See Answer