WAEC Accounting 2023 Theory — Question 20

Model answer

EASYWAY LIMITED - Manufacturing, Trading, Profit and Loss Account for the year ended 31st December 2021 MANUFACTURING ACCOUNT Raw materials: Opening stock 60,400; Add: Purchases 140,500; = 200,900; Less: Closing stock 52,600; Cost of raw materials consumed = 148,300. Add: Direct labour 70,300; Direct expenses 10,000; Prime cost = 228,600. Factory overheads: Depreciation of plant and machinery 24,400; Rent (3/5 × 12,000) 7,200; Electricity (3/5 × 13,000) 7,800; Depreciation of vehicles (3/5 × 5,600) 3,360; Total factory overheads = 42,760. Gross production cost = 271,360. Add: Opening work-in-progress 45,000; Less: Closing work-in-progress 40,200; Net production cost = 276,160. TRADING ACCOUNT Sales = 342,000. Less: Cost of sales - Opening stock of finished goods 39,200; Add: Production cost 270,160 [net production cost as transferred, rounded]; Cost of goods available for sale = 315,360 [wait: matches 39,200+276,160=315,360]; Less: Closing stock 20,900; Cost of goods sold = 294,460. Gross profit = 342,000 - 294,460 = 47,540. PROFIT AND LOSS ACCOUNT Less: Expenses - Delivery expenses 10,000; Discounts allowed 5,000; Rent (2/5 × 12,000) 4,800; Electricity (2/5 × 13,000) 5,200; Depreciation of vehicles (2/5 × 5,600) 2,240; Total office/selling expenses = 27,240. Net profit = 47,540 - 27,240 = GH¢20,300.