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SS2: FINANCIAL ACCOUNTING - 2ND TERM

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Illustration 2

Johnson Ltd is a Manufacturer of Kitchen Furniture. The following information was extracted from the books of the company for the year ended 31st December 1998.

Screen Shot 2020 12 29 at 5.14.31 PM

Additional Information

  1. Light and Power charges accrued on 31st December 1998 amounted to N1,000 and Insurance prepaid on the same date totalled N960.
  2. Stocks were valued at cost on 31st December 1998 as follows:

Raw Material

N8,400

Finished goods

N12,000

  1. Goods manufactured during the year are to be transferred to the trading account at 114,000.
  2. Motor vehicle expenses are to be allocated equally to factory expenses and general administrative expenses.
  3. Office loose tools on hand on 31st December 1998 were valued at N6,000.
  4. Plant and Machinery and Motor Vehicle are to be depreciated at the rate of 10% and 25% respectively.

You are required to prepare:

(i) Manufacturing, Trading, Profit and Loss Account for the year ended 31st December, 1998.

(ii) Balance sheet as at that date.

Solution

Screen Shot 2020 12 29 at 5.11.08 PM
Screen Shot 2020 12 29 at 5.23.54 PM

Workings:

1. Light and Power

6,000  + 1,000 =  N7,000

2. Insurance

13,920 – 960 = N12,960

3. Motor Expenses Factory

½ x 4,440 = 7,200

4. Loose tools

Cost
Depreciation

10,800
(4,800)
6,000

5. Depreciation: Plant and Machinery

10% x 72,000

6. Motor Vehicle:

25% x 36,000 =  N9,000.

Evaluation Questions 

  1. Explain Prime Cost
  2. Explain the purpose of Manufacturing Accounts.
  3. List four (4) Manufacturing account items.
  4. Prepare from manufacturing account to balance sheet.
  5. Idayah Limited is a manufacturing company. The following balances were extracted from its records on 31st December, 2014.
Screen Shot 2020 12 29 at 5.42.06 PM

Additional Information:

Goods manufactured were transferred to sales department at cost plus 10%. You are required to prepare the manufacturing, Trading and Profit and Loss Account for the year ended 31st December, 2014.

(WASSCE JUNE, 2017)
View Answer

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Question 5

 

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