M.Brown used to operate a merchandising business in St. James, Jamaica. Some years ago, he decided to start manufacturing the goods that he sold in order to achieve cost efficiency. On June 30, 2016 you extracted the following Trial Balance from the books of M.Brown Details/Accounts Dr $ Cr $ Accounts payable 10,000,000 Finished goods Inventory, July 1, 2015 20,000,000 Rent and insurance 1,680,000 Carriage outwards 2,400,000 Motor vehicles 7,500,000 Provision for depreciation motor vehicles 1,500,000 Production workers salary 16,000,000 Furniture, etc. 5,000,000 Cash 15,000,000 Direct expenses 4,000,000 Net sales 124,000,000 Capital 57,280,000 Indirect factory expenses 4,000,000 Work in progress, July 1, 2015 8,000,000 Electricity 6,000,000 Purchases of direct raw materials 40,000,000 Administrative expenses 12,000,000 Drawings 3,000,000 Provision for unrealized profit 2,000,000 Direct raw materials, July 1, 2015 10,000,000 Accounts receivable 14,000,000 Carriage inwards for direct raw materials 7,000,000 Machinery 24,000,000 Accumulated depreciation machinery ------------- 4,800,000 Total 199,580,000 199,580,000 Additional information: (i) On June 30, 2016 an amount of $100,000 was outstanding for electricity, while $80,000 pertaining to insurance related to July 1, 2017. (ii) M.Brown adds 10% mark up to his cost of goods manufactured. (iii) A provision for bad debts is to be created equaling to 2% of debtors. (iv) Rent and insurance is shared 3:2 between the factory and the office; while 75% of the electricity is used by the factory. (v) Closing inventories on June 30, 2016 were: Direct raw materials $9,000,000; work-in-progress $9,800,000; and finished goods $15,400,000. (vi) Depreciation is to be provided for as follows: furniture and fittings 15% straight line; plant and machinery 10% reducing balance; motor vehicles 20% reducing balance. (vii) The motor vehicles are used equally between the office and the factory. Required: (a) A Manufacturing Account b) A trading Account c) Profit and Loss
M.Brown used to operate a merchandising business in St. James, Jamaica.
Some years ago, he decided to start manufacturing the goods that he sold in order to achieve cost efficiency. On June 30, 2016 you extracted the following
Details/Accounts Dr $ Cr $
Accounts payable 10,000,000
Finished goods Inventory, July 1, 2015 20,000,000
Rent and insurance 1,680,000
Carriage outwards 2,400,000
Motor vehicles 7,500,000
Provision for depreciation motor vehicles 1,500,000
Production workers salary 16,000,000
Furniture, etc. 5,000,000
Cash 15,000,000
Direct expenses 4,000,000
Net sales 124,000,000
Capital 57,280,000
Indirect factory expenses 4,000,000
Work in progress, July 1, 2015 8,000,000
Electricity 6,000,000
Purchases of direct raw materials 40,000,000
Administrative expenses 12,000,000
Drawings 3,000,000
Provision for unrealized profit 2,000,000
Direct raw materials, July 1, 2015 10,000,000
Carriage inwards for direct raw materials 7,000,000
Machinery 24,000,000
Accumulated depreciation machinery ------------- 4,800,000
Total 199,580,000 199,580,000
Additional information:
(i) On June 30, 2016 an amount of $100,000 was outstanding for electricity, while $80,000 pertaining to insurance related to July 1, 2017.
(ii) M.Brown adds 10% mark up to his cost of goods manufactured.
(iii) A provision for
(iv) Rent and insurance is shared 3:2 between the factory and the office; while 75% of the electricity is used by the factory.
(v) Closing inventories on June 30, 2016 were: Direct raw materials $9,000,000; work-in-progress $9,800,000; and finished goods $15,400,000.
(vi) Depreciation is to be provided for as follows: furniture and fittings 15% straight line; plant and machinery 10% reducing balance; motor vehicles 20% reducing balance.
(vii) The motor vehicles are used equally between the office and the factory.
Required:
(a) A Manufacturing Account
b) A trading Account
c)
d) Balance Sheet
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