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Question One MANUFACTURING ACCOUNT CLASSWORK The following is the trial balance of Limako Ltd, a manufacturing...

Question One

MANUFACTURING ACCOUNT CLASSWORK

The following is the trial balance of Limako Ltd, a manufacturing outfit, on 31st December, 2019: NN

Inventory (1/1/19):

Raw material Work-in-progress Finished goods

Direct Wages

Purchase of raw materials Carriage inwards

Plant and Machinery Accumulated depreciation Admin. Office Equipment Accumulated Depreciation General office expenses Lighting

Administrative salaries Sales reps. salaries Sales reps. commission Rent

Insurance

Bank charges Discount allowed Carriage outwards Sales

Accounts Receivables Accounts payables Cash at Bank

Cash in Hand Drawings

Capital

Notes at 31st December 2019:

21,000 13,500 32,900 35,000

370,000 10,500 250,000

40,000

31,000 7,500 44,000 30,000 11,500 72,000 12,200 2,300 4,800 5,900

142,300

56,800 11,500 20,000

1,224,700

25,000 8,000

750,000 125,000

316,700 1,224,700

 Inventory: Raw material = N24,000; WIP = 15,000 and

 Lighting, rent and insurance are to be apportioned between the factory and administration

in the ratio 2:1

 Accrued administrative salaries was N2000

 Prepaid insurance amounted to N3,200

 Provision for Doubtful debt to be 5% of Accounts receivables

 Depreciation on Plant and Machinery is 10% per annum on cost, while Office equipment

is 20% on cost.

finished good = N40,000

Required:

i. Prepare the manufacturing, trading, and profit or loss accounts as at end of the period and

ii. A statement of financial position as at 31st December 2019. (Show all workings)

Question Two

i. Exhaustively distinguish between the final accounts of a manufacturing company from

that of a trading company

ii. Discuss with an illustrative example how common expenses are treated in the final

accounts of a manufacturing company (ensure you also include the treatment of prepayments and accruals).

Expert Solution

Answer:-

ekkarill92 answered 2 years ago

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