Exercises
Question 1
Tik Tok Manufacturing Enterprise principal activities manufactured and sold sports shoes. It had also
decided to import genuine leather shoes to meet the needs of the local consumers.
The following balances were extracted from the books on 31 December 1990:
$
Carriage inwards: shoes imported
62,300
Carriage outwards
Electricity
6,500
5,600
Factory expenses
44,000
Manufacturing wages
Office expenses
137,500
19,700
Office furniture and fixtures at cost
121,000
Opening stocks:
Finished goods at cost
52,300
Work in progress at cost
23,800
Plant and machinery at cost
308,000
Purchases: shoes imported
352,000
Rates and insurance
8,300
Raw materials consumed
354,900
Returns inwards: Shoes manufactured
Office salaries
146,800
Sales:
Shoes manufactured
Shoes imported
Selling expenses
Additional information:
925,300
538,600
36,200
13,400
(i) Closing stocks valued at cost:
$
Shoes manufactured
-
Shoes imported
55,400
Work in progress
36,700
(ii) From 1 January 1990 onwards, the manufactured goods are transferred to the
trading account at factory cost plus 25% profit loading.
(iii) Depreciation is to be provided at 10% on cost for office furniture and fixtures
and plant and machinery.
(iv) The expenses on electricity, and rates and insurance are chargeable three-fifths
to the factory and the balance to the office.
(v) On 1 July 1990, the company issued for cash $300,000 10% debentures
repayable at the end of June 1995.
(vi) On 31 December 1990, accrued office salaries amounted to $13,200 and the
prepaid insurance premium was $2,300.
REQUIRED:
Prepare for Tictac Ltd. The following accounts for the year ended 31 December
1990:
6
S5 Manufacturing Account/LWL
(a)
A manufacturing account showing the prime cost and the total cost of
manufactured shoes transferred to the trading account.
(b)
A trading and profit and loss account showing separately the gross
profit on sales of manufactured shoes and imported shoes.