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Question 4 [unit 5: obj. 1;4] HanLue Brothers, a manufacturing company, produces the following balances from...

Question 4 [unit 5: obj. 1;4]

HanLue Brothers, a manufacturing company, produces the following balances from its books at 30th September 2017:

$

Stocks at 1 October 2016:

Raw materials

7,450

Work-in-progress(factory cost)

5,330

Finished goods(transfer value)

12,110

Purchases of raw materials

128,740

Purchases returns

310

Direct expenses

3,280

Return inwards

1,215

Carriage inwards

1,055

Rates

5,250

Light, heat and power

3,270

Direct Wages

187,240

Indirect Wages

14,320

Telephone

890

Factory repairs

2,215

Insurances

1,420

Factory salaries

38,000

Office salaries

24,000

Sales salaries

27,435

Plant & machinery ( at cost)

160,000

Provision for depreciation of plant & machinery at 1 October 2016

64,000

Bad debts (written off)

325

Bank

3,115

Sales

721,560

Furniture & equipment (at cost)

-Factory

42,000

-Office

48,000

Provision for depreciation of furniture & equipment at 1 October 2016

-Factory

8,400

-Office

9,600

Office machine at cost

12,000

Provision for depreciation on office machine

3,000

Carriage outwards

205

Discount allowed

950

Land

500,000

Capital

288,045

Debtors

18,526

Creditors

              11,756

Bank Loan

175,000

         

Additional information:

(1) Closing stocks at 30 September 2017 are as follows:

$

Raw materials

6,325

Work-in-progress(factory cost)

6,105

Finished goods(transfer value)

15,225

(2) Prepayments at 30 September 2017:

$

Rates

450

Insurance

220

(3) Accruals at 30 September 2017:

$

Direct wages

1,220

Telephone

70

Light, heat and power

210

(4) At 30 September 2017, depreciation is to be provided as follows:

Per year on cost

Plant and machinery

20%

Furniture and equipment

10%

(5) Expenses are to be apportioned to the factory as follows:

$

Rates

4 / 5

Insurances

3 / 4

Telephone

2 / 3

Light, heat and power

3 / 4

(6) It is the policy of the company to transfer goods manufactured to the warehouse at factory cost plus 15%

Required:

  1. Prepare in vertical format, Manufacturing and Trading and Profit and Loss Accounts HanLue Brothers for the year ended 30 September 2017 and a Balance Sheet as at that date.             Show all workings.                                                                                   
  1. Explain two (2) differences between accounting for a manufacturing and retailing entity.                                                                                                                         

(total 30 marks)

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