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Final Accounts of a Manufacturing Company The following balances were extracted from the books of Maher Ltd as on 31/12/2012 Share Capital: € € Authorised - 900,000 Ordinary Shares at €1 each Issued - 700,000 Ordinary Shares at €1 each Factory Buildings ............................................. - Leaving Cert Accounting - Question 1 - 2013
Question 1
Final Accounts of a Manufacturing Company The following balances were extracted from the books of Maher Ltd as on 31/12/2012 Share Capital: € € Autho... show full transcript
Worked Solution & Example Answer:Final Accounts of a Manufacturing Company The following balances were extracted from the books of Maher Ltd as on 31/12/2012 Share Capital: € € Authorised - 900,000 Ordinary Shares at €1 each Issued - 700,000 Ordinary Shares at €1 each Factory Buildings ............................................. - Leaving Cert Accounting - Question 1 - 2013
Step 1
Manufacturing Account for the year ended 31/12/2012
Answer
-
Stock Raw Materials 01/01/2012:
- €37,000
-
Purchase of Raw Materials:
- €378,500
-
Less Stock of Raw Materials 31/12/2012:
- €37,000
- Cost of Raw Materials consumed:
- = €378,500 - €37,000 = €341,500
-
Add Factory Wages:
- Factory Wages Total: €130,000
- Direct Wages (75%): = €130,000 x 0.75 = €97,500
- Supervisor's Wages (25%): = €130,000 x 0.25 = €32,500
-
Add Direct Expenses:
- €26,000
-
Add Factory Overhead Expenses:
- Supervisor’s Wages: €32,500
- Factory Insurance (20,000 - 5,000): €9,000
- Factory Light and Heat: €9,000
- Depreciation Plant and Machinery: 20% x €260,000 = €52,000
- Depreciation Factory Building: 2% x €600,000 = €12,000
- Total Overhead Expenses: = €32,500 + €9,000 + €9,000 + €52,000 + €12,000 = €114,500
-
Total Manufacturing Cost (Prime Cost + Factory Overhead):
- = €341,500 + €114,500 = €456,000
-
Less Work in Progress 31/12/2012:
- €73,000
-
Less Sale of Scrap Materials:
- €7,500
-
Final Manufacturing Cost Calculation:
- = €456,000 - €73,000 - €7,500 = €375,500
Step 2
Trading, Profit and Loss Account for the year ended 31/12/2012
Answer
-
Sales:
- €734,000
-
Less Sales Returns:
- €10,100
- Net Sales: = €734,000 - €10,100 = €723,900
-
Less Cost of Sales:
- Opening Stock: €65,000
- Add: Factory Costs: €375,500
- Less Closing Stock: €64,000
-
Gross Profit Calculation:
- = €723,900 - (€65,000 + €375,500 - €64,000)
- = €723,900 - €376,500 = €347,400
-
Less Expenses:
- Administration: €11,000
- Stationery: €12,800
- Directors' Fees: €23,800
- Selling and Distribution: €6,000
- Advertising: €9,000
- Total Expenses: = €11,000 + €12,800 + €23,800 + €6,000 + €9,000 = €62,600
-
Net Profit before Taxation:
- = €347,400 - €62,600 = €284,800
-
Add Profit and Loss Balance 01/01/2012:
- €11,500
-
Final Profit and Loss Balance Calculation:
- = €284,800 + €11,500 = €296,300
Step 3
Balance Sheet as at 31/12/2012
Answer
-
Intangible Assets:
- Patents: €51,000
-
Fixed Assets:
- Factory Buildings: €600,000
- Less: Depreciation: €12,000
- N.B.V: €588,000
- Plant and Machinery: €390,000
- Less: Depreciation: €88,000
- N.B.V: €302,000
- Delivery Vans: €107,000
- Less: Depreciation: €26,000
- N.B.V: €81,000
-
Total Fixed Assets:
- €588,000 + €302,000 + €81,000 = €971,000
-
Current Assets:
- Closing Stocks:
- Raw Materials: €37,000
- Work-in-Progress: €64,000
- Finished Goods: €65,000
- Debtors: €90,000
- Less Bad Debt Provision: €4,100
- Total Current Assets: = €37,000 + €64,000 + €65,000 + €90,000 - €4,100 = €251,900
- Closing Stocks:
-
Creditors:
- Creditors (within 1 year): €81,000
- Taxation: €13,500
- VAT: €13,500
- Bank: €51,000
- Debenture Interest Due: €10,500
- Total Current Liabilities: = €81,000 + €13,500 + €13,500 + €51,000 + €10,500 = €169,500
-
Net Current Assets:
- = €251,900 - €169,500 = €82,400
-
Financed By:
- Capital and Reserves:
- Authorised: 900,000
- Issued: 700,000
- Retained Earnings: €14,000
- 10% Debentures: €140,000
- Capital and Reserves:
-
Total Liabilities:
- = 700,000 + 14,000 + 140,000 = €854,000