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The following details were extracted from the books of Konongo Industries Limited a manufacturer of soap...

The following details were extracted from the books of Konongo Industries Limited a manufacturer of soap for the year ended 31st March, 1999

                                                                                                              GH¢

Opening Stocks: Raw materials                                                          785,000

                            Work-In-Progress (WIP)                                        216,000

                              Finished Goods                                                     432,750

Purchases                                                                                            1,871,215

Sales                                                                                                    4,343,680

Return Outwards                                                                                52,100

Return Inwards                                                                                   18,350

Carriage Inwards                                                                                74,180

Discount Allowed                                                                               15,015

Discount Received                                                                              46,780

Plant and Machinery at cost                                                               1,850,000

Freehold Building at cost                                                                    1,610,000

Furniture and Fittings at cost                                                              318,000

Indirect Wages                                                                                    127,125

Lighting and Heating                                                                          74,300

Insurance                                                                                             16,720

Rates                                                                                                   18,000

Salaries-selling and administration                                                     342,180

Motor Vehicle at cost                                                                         1,000,000

Direct wages                                                                                       692,750

Additional Information:

  1. Depreciation was charged on cost at the following rates:

Plant and machinery                10% per annum

Furniture and Fittings             12.5% per annum

Freehold Building                   10% per annum

Motor Vehicles                       20% per annum

  1. The proportion of use of the fixed assets as at 31st March, 1999 by the factory and office was as follows:

Factory                                                Office

Plant and machinery                            90%                                                     10%

Furniture and Fittings                         25%                                                     75%

Freehold Building                               80%                                                     20%

Motor Vehicles                                   ***                                                      100%

  1. The insurance expense was in respect of the plant and machinery.
  2. Light and heating and rates were in respect of the freehold building.
  3. Closing stocks of raw material GH¢539,400; closing WIP GH¢363,910 and closing finished goods GH¢244,840

Required: prepare manufacturing, trading and profit and loss account for the year ended 31st March,1999.

Solutions

Expert Solution

In the books of Konongo Industries Limited

Manufacturing, trading and profit and loss account for the year ended 31st March,1999.

Particulars Amount (GH¢) Amount (GH¢) Particulars Amount (GH¢) Amount (GH¢)
Opening Stock Sales 4343680
Raw material 785000 (-) Returns Inward (18350)
Work -in-Progress 216000 (-) Discount Allowed (15015) 4310315
Finished Goods 432750 1433750
Purchases 1871215 Closing Stock
(-) Returns Outward (52100) Raw material 539400
(-) Discount Received (46780) 1772335 Work -in-Progress 363910
Carriage Inward 74180 Finished Goods 244840 1148150
Direct Wages 692750
Insurance 16720
Depreciation 305237.5
Gross Profit 1163492.5
5458465 5458465
Indirect Wages 127215 Gross Profit 1163492.5
Lighting & Heating 74300
Rates 18000
Salaries - Selling & Administration 342180
Depreciation 280512.5
Net Profit 321285
TOTAL 1163492.53 TOTAL 1163492.5

NOTES :

1. Depreciation

Assets Cost (GH¢) Depreciation %

Depreciation (GH¢)

% of Factory Factory (GH¢) % of Office Office (GH¢)
Plant and machinery 1850000 10 185000 90 166500 10 18500
Furniture and Fittings 318000 12.5 39750 25 9937.5 75 29812.5
Freehold Building 1610000 10 161000 80 128800 20 32200
Motor Vehicles 1000000 20 200000 - 0 100 200000
TOTAL 4778000 585750 305237.5 280512.5

2. Indirect wages are not attributable for Production

3.lighting and Heating & Rates of free hold buiding are not attributable for Production (Manufacturing & Trading Account.


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