Question

Question 4
Otjiwarongo Manufacturer Ltd has the following information related to the reporting period ended 31 December 2019.
Inventory : Raw materials - 1 January 2019 N$90 000
Raw material purchased during the year N$780 000
Labour cost N$655 000
Rent N$150 000
Electricity N$75 000
Manufacturering equipment at COST N$100 000
Accumulated provision for depression (1 January 2019:
Manufacturering equipment N$30 000
Delivery vehicles N$15 000
Uncomplicated goods - 1 January 2019 N$33 000
Inventory of completed - 1 January 2019 N$315 000
Sundry sales and administrative expenses N$170 000
Inventory on 31 December 2019:
Raw materials N$120 000
Uncompleted goods N$31 500
Completed goods N$450 000
Purchases (other inventory) N$100 000
Additional information :
I) An amount of N$20 000 is erroneously debited against the purchases account (other inventory), instead of raw material. Correct the error
ii) N$600 000 is in respect of direct labour cost, whilst the residue is for indirect manufacturing labour.
iii) The size of the factory is N$250 square meters. The rent amount to N$400/ square meters per annum.
iv) 60% of the electricity is in the respect of manufacturing.
v) depreciation is as follows :
Manufacturing equipment written off in 10 equal installments.
Otjiwarongo Manufacturer Ltd bought the manufacturing equipment 1 January 2016
15% per annum on vehicles according to the reducing balance method.
1 prepare the following general ledger accounts for for Otjiwarongo Manufacturer Ltd for the year ended 31 December 2019
1.1 raw materials inventory account
1.2 factory overhead expenses account
1.3 work in progress account
1.4 finished goods

Answer 1

SOLUTION:-

General ledger accounts of Otjiwarongo Manufacturer Ltd for the year ended on 31st December, 2019 are as follows:

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