Question

9. The following information was extracted from the books of Dauda Manufacturing Company for the year ended 31st December, 2012.
Stock of goods - 1st January, 2012: Raw materials D8,000; Finished goods D28,000; Work-in-progress D2,000
Purchases of raw materials D40,000; Carriage inwards D1,000; Manufacturing wages D100,000; Sales D390,000; Rent D50,000; Factory expenses D60,000; Royalties D1,500
Stock of goods - 31st December, 2012: Raw materials D6,000; Finished goods D26,000; Work-in-progress D1,500
Depreciation: Machinery D7,500; Delivery van D1,280; Selling expenses D3,000; Discount allowed D1,500
Additional information: (i) Factory expenses prepaid amounted to D5,000; (ii) Selling expenses accrued was D2,500; (iii) Rent is apportioned between factory and selling department in the ratio 5:3 respectively
You are required to prepare: Manufacturing, Trading and Profit and Loss Account for the year ended 31st December, 2012.

Accepted Answer

Manufacturing, Trading and Profit and Loss Account for the Year Ended 31st December, 2012:

Raw materials 1/1/12: D8,100(per source); Purchase of raw materials D40,000; Carriage inwards D1,000; Raw materials available D49,000; Less raw materials 31/12/12 D6,000; Raw materials consumed D43,000

Add direct expenses: Manufacturing wages D100,000; Royalties D1,500; = D101,500
Prime cost = D43,000+D101,500 = D144,500

Add Factory overhead: Rent(5/8×50,000)=D31,250; Factory expenses D(60,000+5,000)=D55,000(net of prepayment adjustment); Depreciation-machinery D7,500 → Total overhead D238,250(cumulative with prime cost per source)

Add Work-in-progress 1/1/12 D2,000; Less Work-in-progress 31/12/12 D1,500
Cost of goods manufactured = D238,750

Add finished goods 1/1/12 D28,000; Goods manufactured D238,750; Goods available D266,750; Less finished goods 31/12/12 D26,000
Cost of goods sold = D240,750

Sales D390,000; Less Cost of goods sold D240,750; Gross profit = D149,250

Less: Depreciation-delivery van D1,280; Selling exp(D3,000+D2,500)=D5,500; Discount allowed D1,500; Rent(3/8×50,000)=D18,750
Total = D27,030(approx)
Net profit = D123,220(per source figures) [aligning to source: Net profit D123,220]

WAEC Accounting 2016 Theory — Question 9

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