UNIVERSITY OF GHANA BUSINESS SCHOOL

DEPARTMENT OF ACCOUNTING
UGBS 208: INTRODUCTION TO FINANCIAL ACCOUNTING
SECOND SEMESTER 2022/2023 ACADEMIC YEAR

Tutorial Question – Manufacturing Account

QUESTION I
The Trial balance as at 31st March 2020 below was extracted from the books of Mr. Amoah.
DR CR
GH¢ GH¢
Capital 5,400
Plant and machinery (at cost) 16,000
Provision for depreciation on plant and machinery 5,630
Office equipment 7,750
Provision for depreciation on office equipment 1,300
Stocks on 01/04/19:
Direct material 2,200
Work-in-Progress 2,050
Finished goods 1,800
Direct Wages 32,512
Purchases of direct material 12,000
Land and building 5,200
Drawing 2,000
Electricity 4,940
Advertising 2,250
Discount allowed 575
Interest on loan 600
Provision for unrealized profit at 31/03/20 300
Sales 70,700
Trade Debtors & Creditors 4,753 1,200
20% Loan from Kofi 4,000
Cash 117
Bank 7,652
Rates & Insurance 1,000
Discount received 200
Carriage on Purchase 470
Returns inwards 900
Returns on raw materials 735
97,117 97,117
You are given the following additional information:
1. Stocks on 31/03/20 were:
Direct material GH¢1,500
W-I-P GH¢2,055
Finished goods GH¢1,650
2. Depreciation expense for the year are to be estimated as follows:
Plant and machinery GH¢2,430
Office equipment GH¢1,235
3. Mr. Amoah took the following goods for his personal use:
Direct material GH¢1,250
Finished goods GH¢1,500
4. Common expenses are to be allocated as follows:
Manufacturing Administration
GH¢ GH¢
Electricity 3,705 1,235
Rates and insurance 800 200
Wages 22,760 9,752
5. Goods are transferred to trading department at a mark-up of 20%.

REQUIRED: Prepare the company’s manufacturing, income statement for the year ended
31st March 2020, and a statement of financial position as at that date.
QUESTION II
The following Trial balance has been extracted from the books of Jesus Is King Ltd,
manufacturers of hide for the local leather market, as at 31st December, 2021.

DR (GH CR (GH
  ¢) ¢)
Inventory at 1/1/2021: Raw materials 22,000  
Finished goods 37,500  
Work-in-progress 14,900  
Wages (direct GH¢160,000; indirect GH¢165,000) 325,000  
Carriage inwards on raw materials 4,000  
Purchases of raw materials 563,400  
Plant & Machinery (cost GH¢280,000) 230,000  
Computers 12,000  
General factory expenses 83,500  
Factory power 13,700  
Administrative salaries 44,000  
Rent 10,000  
Insurance 4,200  
General administrative expenses 15,700  
Provision for unrealised profit (1/1/2021)   1,000
Accounts receivables and payables 142,300 63,000
Cash & Bank 183,000  
1,200,00
Sales   0
Drawings 80,000  
Capital as at 1/1/2021   521,200
1,785,20 1,785,20
  0 0

Additional information:
a) Rent unpaid as at 31st December, 2021 amounted to GH¢2,000.
b) Rent and insurance are to be apportioned as: Factory 4/6 and Administration 2/6
c) Inventory at 31st December, 2021 was as follows: Raw materials GH¢25,000; Wok-
in-progress GH¢20,000; Finished goods GH¢50,000
d) Depreciation on plant & machinery, and computers is at 10% per annum on cost
e) Goods manufactured were transferred at a value of GH¢1,074,000

You are required to prepare the manufacturing account, income statement for the year ended
31st December, 2021 and a statement of financial position as at that date.
QUESTION III
The trial balance of Goodness & Mercy Ltd, manufacturers of foot wares as at 30 June 2021
is as follows:

Dr Cr

GH¢ GH¢

Capital 1,156,000

Drawings 80,000

Cash and Bank 237,500

Trade Debtors and Creditors 569,500 488,680

Sales 4,000,000

Carriage outwards 23,600

Discount allowed 19,200

Bank charges 9,200

General administration expenses 53,600

Insurance 16,800

Rent and Rates 48,000

Administrative salaries 176,000

Factory power 5,480

Machinery repairs 28,000

Salesmen's salaries 166,000

General factory expenses 124,000

Office equipment (cost GH¢100,000) 95,320

Plant and machinery (cost GH¢1,120,000) 920,000

1,480,00
Purchase of raw materials 0

Carriage inwards 14,000

Purchase returns 12,000

 Royalties 28,000
1,300,00
Wages (direct GH¢720,000; factory indirect GH¢580,000) 0

Provision for unrealised profit (1 July, 2020) 31,120

Inventory at 1 July 2020:

Raw Materials 84,000

Finished goods 155,600

Work in process (WIP) 54,000

5,687,80
0 5,687,800

The following information was also available as at 30th June 2021:

i) Inventory were valued as: Raw materials - GH¢260,000; Finished goods GH¢160,000
and WIP - GH¢60,000;
ii) Machinery repairs, rent and rates and insurance expenses are to be apportioned such
that Factory takes 1.5 as much as Administration;
iii) Office equipment is to be depreciated at 15% on cost, and plant and machinery at 20%
on the written down value;
iv) Insurance prepaid and rent due but not paid amounted to GH¢2,200 and GH¢1,400
respectively;
v) Manufactured goods are transferred to trading section at a profit and the figures in
respect of the beginning and ending finished goods inventory include this profit
element

You are required to prepare a manufacturing account, income statement for the year ended
30th June 2021, and a statement of financial position at that date.
QUESTION IV

The following information relates to Bob Barbosa Ent. Below is the trial balance extracted as
at 30th June 2021.
 DR GH¢ CR GH¢
Returns inwards 1,600
Cash in hand 8,530
Trade receivables 4,600
Drawings 13,704
Plant and Machinery (GH¢ 100,000) 90,000
Office Equipment (GH¢ 20,000) 16,000
Furniture & Fittings (GH¢ 10,000) 8,000
Land and building 100,000
Provision for unrealised profit (1/7/2020) 4,600
Sales 1,432,600
Discounts 2,800 3,000
Cash at Bank 2,470
Trade payables 5,280
Advertising 3,400
Sales commission 20,700
Carriage outwards 6,020
Insurance 22,900
Salaries 85,600
Postage and Telephone 4,080
Capital 248,000
Stock (1/07/2020)
Raw materials 50,000
Finished goods 50,600
Work in Progress (WIP) 4,200
Purchase of raw materials 950,600
Carriage on raw materials 2,250
Returns on Purchase of raw material 4,450
Factory wages 212,920
Factory power 18,200
Electricity and water 13,700
Printing and stationery 5,056
1,697,930 1,697,930

Additional information

i. Finished goods manufactured during all the accounting period are transferred at a
manufacturing price of cost of production plus 10%.
ii. Stock at 30th June 2021 were: Raw materials GH¢ 171,650, Work in Progress
(WIP) GH¢ 4,350 Finished goods GH¢ 68,200
iii. Provision for depreciation rate is 10% per annum on all cost of fixed assets
purchased by the company excluding land and building.
iv. An amount of GH¢ 4,900 and GH¢ 46,000, GH¢ 7,980 included in insurance,
salaries, electricity and water respectively relates to the factory.

You are required to prepare a manufacturing account, income statement for the year
ended 30th June 2021, and a statement of financial position at that date.
QUESTION V

The trial balance of Azumah Ent. was at extracted at 30th June 2022 is shown below;

DR (GH¢) CR (GH¢)
Capital   700,000
Stock    
WIP 328,000  
Raw materials 80,000  
 Finished goods 180,000  
Carriage inwards 24,000  
Carriage outwards 14,000  
Purchases of raw materials 1,684,150  
Returns inwards 7,350  
Light and heat 60,000  
Rent and rates 132,000  
Direct factory wages 390,000  
Office wages 104,000  
Sales commission to selling agents 17,000  
Bank 17,350
Sales   2,803,170
Drawings 182,000  
Interest on loan 11,000  
Plant and machinery at Cost 560,000  
Office equipment 40,000  
Accumulated Depreciation:    
Royalties 8,000
Office equipment   16,000
Plant and machinery   100,000
Trade receivable and trade payables 300,000 320,000
Cash 28,650  
5% Loan   220,000
Discounts  3,250 4,180
Returns on raw materials   4,150
  4,167,500 4,167,500

Additional Information

i) At 30th June 2022 accrued direct factory wages amounted to GH¢ 12,000 and
office wages GH¢ 2,000; rent paid included GH¢ 12,000 on 20th March 2022, for
a period 1st March to 1st August.
ii) Records showed that, at the year-end stocks were valued as follows: raw materials
GH¢ 108,000, WIP GH¢ 340,000 and finished goods GH¢ 160,000.
iii) Depreciation should be allowed for factory machinery on a straight-line method
over 7 years, and office equipment on the reducing balance method at 25%.
iv) A provision of GH¢ 20,000 should be made for doubtful debts.
v) Light and heat should be apportioned between factory and office in the ratio 4:1
respectively whereas rent and rates in the ratio 3:1 respectively.
vi) Goods are transferred to the trading department at cost plus 20% mark-up.

You are required to prepare a manufacturing account, income statement for the year
ended 30th June 2022, and a statement of financial position at that date.
QUESTION VI
The trial balance of Nelson Media Hub, a high-tech manufacturing company for the year
ending 31/12/2020 is shown below:
GH¢ GH¢
Building 1,680,000
Capital 3,500,000
Debentures 1,036,000
Machinery 2,380,000
Bank 700,000
 Cash 400,400
Sales 6,300,000
Equipment 1,120,000
Motor vehicles 1,540,000
Provision for depreciation:
Equipment 168,000
Motor vehicle 84,000
Purchase – Raw material 1,330,000
Account receivable 371,000
Account payables 397600
Stock 01/01/20: Raw material 137,200
Partly finished goods 147,000
Finished goods 177,800
Returns inwards 102,200
Returns outwards 82,600
Carriage inwards 152,600
Carriage outwards 105,000
Interest payable 140,000
Interest receivable 35,000
Wages 560,000
Salaries 257,600
Rent 210,000
Electricity and gas 114,800
Repairs – factory 22,400
Lubricants 49,000
Selling and distribution expenses 91,000
Advertising expense 25,200
11,708,200 11,708,200

Additional information:
a) Depreciation is to be provided as follows: Machinery 10%, Equipment 15% and
Motor vehicle 15%.
b) Closing stocks are: Raw material - GH¢134,400; Partly-finished goods - GH
¢173,600; Finished goods - GH¢140,000.
c) Wages include GH¢168,000 being factory Supervisors and Managers salaries.
d) It is the company’s policy to allot 75% of the cost of rent, electricity and gas to
production.
e) Rent accrued amounted to GH¢70,000
f) Electricity and gas amounting to GH¢ 16,800 were paid in advance.
g) The company earned a commission of GH¢63,000, but payment has not yet been
received and no entries were made in the books.

Required: Prepare the manufacturing account, income statement for the year, as well as the
statement of financial position as at year end.