Question

The financial year end of Diary Manufacturing Limited is 31 December. At 31 December 2012, the following balances are available:

Item	€
Land and building at cost	286000
Plant and machinery at cost	210000
Accumulated depreciation on plant and machinery	46000
Purchase of raw material	260200
Sales	635000
Factory rates expenses	6000
Factory heats and light	13000
Account receivables	74400
Account payable	61800
Wages	126000
Direct expenses	18200
Selling expenses	22000
Administration and general expenses	46000
Bank	49000
General reserve	60000
Retained profit	36000
Inventory 1st January 2012: Raw material                                                Finished goods	40000 76000
Dividends paid: Preference shares                          Ordinary shares	1680 40000

Notes

1. The inventory on 31 December 2012: Raw Material €44000, finished goods €35000.
2. Salaries include € 13400 for director fees.
3. The wages include €31400 for supervision
4. Depreciation is to be charged at 10% on cost of plant and machinery

Required: Prepare the manufacturing accounts of the Diary Limited

Note : Answers should be in Word Version Format

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Answer 1

Diary Limited

Manufacturing Account

For the year ended 31 Dec 2012

Raw material as at 1st January 2012 40000

Add Purchase of raw material 260200

300200

Less : Raw materials as at

31 Dec 2012 44000

Direct Material 256200

Add Direct Expenses 18200

Add Direct Wages

(126000-31400) 94600

Prime Cost    369000

Add Factory Overhead

Factory rates expenses 6000

Factory heats and light 13000

Wages (Supervision) 31400

Depreciation on plant and

machinery (210000*10/100) 21000

Production Cost €440400

Notes 1) Opening stock of finished goods and closing stock of finished goods will get included in trading account

2) Adminstrative and general expenses (salaries ) will get included in Profit and Loss Account

3) Depreciation calculated on cost (as given in question) and not on written down values

4) Rest expenses will get included in Trading and Profit and Loss Account.