ASSIGNMENT # 1

QUESTION # 1
From the following information prepare the manufacturing, trading and profit and loss
accounts for the year ending 31 December 2012 and the balance sheet as at 31
December 2012 for the firm of M. Ali.
Rs. Rs.
Purchase of raw materials 258,000
Fuel and light 21,000
Administration salaries 17,000
Factory wages 59,000
Carriage outwards 4,000
Rent and rates 21,000
Sales 482,000
Returns inward 7,000
General office expenses 9,000
Repairs to plant and machinery 9,000
Stock at 1 January 2012
Raw materials 21,000
Work in progress 14,000
Finished goods 23,000
Sundry creditors 37,000
Capital account 457,000
Freehold premises 410,000
Plant and machinery 80,000
Debtors 20,000
Provision for depreciation on plant and
Machinery at 1 January 2012 8,000
Cash in hand 11,000
984,000 984,000
Make provision for the following:
1. Stock in hand at 31 December 2012
Raw materials 25,000
Work in progress 11,000
Finished goods 26,000
2. Depreciation on plant and machinery – straight line method with 10 years
3. 80% of fuel and light and 75% of rent and rates to be charged to manufacturing
4. Doubtful debts provision – 5% of sundry debtors
5. ￡4,000 outstanding for fuel and light
6. Rent and rates paid in advance - Rs.5,000
7. Market value of finished goods - Rs.382,000
Question # 2
The Karachi Company uses job order costing. At the beginning of the May, two jobs
were in process:
Job 369 Job372
Materials Rs. 2,000 Rs. 700
Direct labour Rs. 1,000 Rs. 300
Applied factory overhead Rs. 1,500 Rs. 450

There was no inventory of finished goods on May1. During the month, Jobs 373, 374,
375, 376, 378, and 379 were started.

Materials requisitions for May totaled Rs.13,000,

Direct labour cost, Rs.10,000
Actual factory overhead, Rs.16,000.
Factory overhead is applied at a rate of 150% of direct labour cost.

The only job still in process at the end of May is No. 379, with costs of Rs.1,400 for
materials and Rs.900 for direct labour.

The only finished job on hand at the end of May, has a total cost of Rs.2,000.

Required:
a) T accounts for work in process, finished goods, cost of goods sold, factory
overhead control, and applied factory overhead.
b) General journal entries to record:
a. Cost of goods manufactured
b. Cost of goods sold
c. Closing of over or under applied factory overhead to cost of goods sold.