Question 1
The following Trial Balance was extracted from the books of General Production Company Ltd on December 31, 2011 and presented to you the Financial Accountant:
Trial Balance
|
Details/Accounts
|
Dr $
|
Cr $
|
|
Purchases of direct raw materials
|
25,200,000
|
|
|
Stock of direct raw materials January 1,2011
|
5,500,000
|
|
|
Wages paid to manufacture goods
|
12,000,000
|
|
|
Insurance
|
2,000,000
|
|
|
Electricity
|
1,450,000
|
|
|
Cash at bank
|
28,000,000
|
|
|
Accounts payable
|
|
3,500,000
|
|
Discounts
|
450,000
|
500,000
|
|
Return of direct raw materials
|
|
200,000
|
|
Cash in hand
|
600,000
|
|
|
Work-in-progress January 1,2011
|
3,000,000
|
|
|
Salaries
|
3,500,000
|
|
|
Returns inward of finished goods
|
300,000
|
|
|
Carriage inwards of direct raw materials
|
1,000,000
|
|
|
Indirect raw materials January 1,2011
|
2,500,000
|
|
|
Accounts receivable
|
7,500,000
|
|
|
Provision for bad and doubtful debts
|
|
75,000
|
|
Machinery
|
10,000,000
|
|
|
Accumulated depreciation machinery
|
|
4,000,000
|
|
Office furniture
|
2,000,000
|
|
|
Purchase of indirect raw materials
|
2,500,000
|
|
|
Motor vehicles
|
14,000,000
|
|
|
Accumulated depreciation motor vehicles
|
|
2,800,000
|
|
Finished goods January 1, 2011
|
6,000,000
|
|
|
Provision for unrealized profit
|
|
1,000,000
|
|
Indirect wages
|
3,000,000
|
|
|
Rent payable
|
2,400,000
|
|
|
Capital
|
|
58,175,000
|
|
Stationery
|
250,000
|
|
|
Bad debts
|
200,000
|
|
|
Direct expenses
|
4,000,000
|
|
|
Sales
|
|
70,300,000
|
|
Carriage outwards
|
2,200,000
|
|
|
Rent receivable
|
|
500,000
|
|
Salesmen commission
|
1,500,000
|
|
|
|
141,050,000
|
141,050,000
|
Notes:
(i) The company adds 20% mark-up to its cost of production.
(ii) The provision for bad and doubtful debts is to be increased to 1.5% of debtors.
(iii) $200,000 of the insurance relates to 2012.
(iv) Rent payable is to be apportioned 75% factory; 25% office.
(v) depreciation is to be charged as follows: Machinery 10% Reducing balance; Motor vehicles 10% Straight line; Office furniture 10% on cost.
(vi) On December 31, 2011, $50,000 was outstanding for stationery.
(vii) Stocks as at December 31, 2011 were as follows: Direct raw materials, $4,500,000; Work-in-progress, $4,000,000; Finished goods, $4,500,000; Indirect raw materials, $2,000,000
(viii) 1/5 of the amount paid for insurance is to be allocated to the office, while 60% of the electricity relates to the factory.
(ix) The motor vehicles are used equally between the factory and the office.
Required:
(a) Prepare Manufacturing, Trading and Profit and Loss Account for the year ending December 31, 2011.
(b) A Balance Sheet as at December 31, 2011.