Professional Documents
Culture Documents
CHAPTER – 13
TABLE OF CONTENTS
I. Meaning and Introduction II. Objectives of preparing Final Accounts
III. Accounting Systems IV. Matching Principle
V. General Precautions VI. Financial Statements – A Cross Study
VII. Manufacturing Account VIII. Adjustments
IX. Understanding Accounts X. Practical Problems
Final Accounts or Financial Statements are the deliverable(s) of Financial Accounting. It is the end result of
entire accounting process. These final accounts are prepared on the basis of Trial Balance prepared and after
considering additional information. They are used by various users of financial statements depending upon
their objectives. Financial statements of sole proprietors can be further classified as follows:
Sole Proprietors
Non-Manufacturing Manufacturing
Business Entities Business Entities
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CA – FOUNDATION: PRINCIPLES & PRACTICE OF ACCOUNTING BY CA. CS. ANSHUL A. AGRAWAL
Ascertainment of Ascertainment of
FINANCIAL PERFORMANCE FINANCIAL POSITION
Balance Sheet
Trading Profit & Loss
Account Account
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3. ACCOUNTING SYSTEMS
1. Cash System: In this system, entries are made only when cash is received or paid, no entry is made when
a payment or receipt is merely due. Depreciation on fixed assets is however provided in the books.
2. Mercantile System: In this system a record is made on the basis of amounts having become due for
payment or receipt. This is a well-accepted accounting system in the business world and necessary to
arrive at true and fair financial results of business enterprise. Accrual concept is considered in this
system.
DISTINCTION BETWEEN CASH AND MERCANTILE SYSTEM OF ACCOUNTING
POINT OF
CASH SYSTEM MERCANTILE SYSTEM
DIFFERENCE
Rarely followed accounting system Usage Commonly followed accounting system
Followed by proprietary concerns and Followed by all the enterprises
small partnership firms. Relevance including sole proprietary concerns
and partnership firms.
Expenses are accounted for on Expenses are accounted for on accrual
Accounting of
payment basis. basis.
Expenses
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POINT OF
CASH SYSTEM MERCANTILE SYSTEM
DIFFERENCE
Not necessary to provide for – Necessary to provide for –
i. Outstanding expenses. i. Outstanding expenses.
ii. Prepaid expenses. ii. Prepaid expenses.
iii. Outstanding income. Provision iii. Outstanding income.
iv. Pre received income. iv. Pre received income.
v. Debtors. v. Debtors.
vi. Creditors. vi. Creditors.
Profit and Loss A/c. reflects absurd Reliability on Profit and Loss A/c. reflects true and
profitability. Profitability fair profits.
Balance sheet reflects untrue and Reliability of Fin. Balance Sheet reflects true and fair
unfair financial position. Position financial position.
Matching concept (matching of Matching concept in inbuilt in
expenses with income) is not followed. Matching Concept mercantile or accrual system of
Accounting.
Notes:
1. Inspite of system of accounting followed, it is necessary to provide depreciation and account for
closing stock.
2. Accrual is one of the fundamental accounting assumption specified in AS 1 "Discloser of accounting
policies".
Hence mercantile or accrual system of accounting is usual or commonly followed system.
4. MATCHING PRINCIPLE
According to this principle, the revenue and the relevant cost incurred should be co-related and matched, so
that a complete picture is available. It should be noted that losses without any revenue or gains without any
expenses are shown separately in the profit and loss account of the year in which they are incurred. On the
basis of the application of the matching principle, of the total amount spent, certain amounts are shown in the
profit and loss account as expense and the remaining amount is shown in the Balance Sheet as an asset. Similar
treatment is also given to income received.
5. GENERAL PRECAUTIONS
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CA – FOUNDATION: PRINCIPLES & PRACTICE OF ACCOUNTING BY CA. CS. ANSHUL A. AGRAWAL
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Manufacturing Account is a separate account prepared by the entities engaged in Manufacturing business to
ascertain the Cost of Production of Finished Goods. Manufacturing costs of Finished Goods is then transferred
to Trading Account, where such Finished Goods are sold profitability is earned. There is no standardization on
design of a manufacturing account. Following specimen will help you to understand Manufacturing Account in
a better manner:
Dr. Manufacturing Account Cr.
Amount Amount
Particulars Units Particulars Units
(Rs.) (Rs.)
To Raw Material Consumer: By By-products at net
Opening inventory ……. realizable value
By Closing Work-in-
Add: Purchases ……. Process
Less: Closing Inventory ……. ……. By Trading A/c –
To Direct Wages ……. Cost of production
To Direct expenses: …….
Prime cost …….
To Factory overheads:
Royalty …….
Hire charges …….
To Indirect expenses: …….
Repairs & Maintenance …….
Depreciation ……. …….
Factory cost …….
To Opening Woek-in-process …….
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CA – FOUNDATION: PRINCIPLES & PRACTICE OF ACCOUNTING BY CA. CS. ANSHUL A. AGRAWAL
8. ADJUSTMENTS
Accounting Entry -
Trader’s Book -
Stock-in-trade A/c .... Dr.
To Trading Account
(Valuation: cost or market price whichever is lower)
Manufacturer’s Books
Accounting Entries -
1. Stock of Raw Materials/Consumable A/c .. Dr.
To Respective Consumption A/c
(Valuation: Cost or replacement price whichever is lower)
2. Work-in-process A/c ...Dr.
To Manufacturing A/c
(Valuation: Prime cost + factory overheads)
3. Stock of finished Goods A/c .. Dr.
To Trading A/c
(Valuation: Cost or net realisable price whichever is lower)
Notes:
1. Cost is defined as the expenditure incurred on goods purchased. Expenses incurred after the point
of time of acquisition are not considered as part of stock valuation. There are different practices
and interpretations to the word ‘Cost’ (FIFO, LIFO, Weighted Average etc.). One must follow the
practice consistently.
2. Closing stock appears in the Trial Balance, if the stock is already accounted for in the books of
accounts. In this case show the stock directly to the Balance Sheet Asset side.
2. Goods sent on Sale or Return or Approval Basis: Goods sent on sale or return or Approval basis
should be treated as a transaction of sale only when title in the property is transferred from the seller to
the buyer. Sale therefore takes places either on approval of goods by customer within a stipulated period
or on expiry of stipulated period of return.
In case of occasional transactions, goods sent on approval are usually treated as sales by debiting the
account of the party concerned. Return of goods are treated as sales returns. In this case at the time of
closing the accounts, goods with customers, which are still returnable are considered as stock and valued
on the well accepted principle of ‘Cost or market price, whichever is lower’. The Invoice value of such
goods is debited to sales Account (which have been credited earlier) by crediting to party’s A/c or
provision for returnable goods account. In the Balance Sheet provision for returnable goods is deducted
from Sundry Debtors. In the beginning of next year, the entry is reversed.
-: 161 :-
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Notes:
1. No special accounting treatment is necessary if the transaction is recorded as a sale only after
approval of goods within a stipulated period or on expiry of stipulated period.
2. Stock with customers, pending for approval will have to be treated as stock at cost.
3. Goods with Consignee: Special accounting treatment is usually given to account for consignment
transactions. Goods sent to consignee are often treated as sales by the proprietor. In this case goods lying
with consignee on the closing date are treated as stock and valued on the basis of ‘Lower of cost or
market price’. The entry of sale is reversed by debiting Sales Account and crediting Consignee’s
personal account.
Notes:
1. The word ‘Cost’ Includes proportionate non-recurring expenses incurred on consignment stock.
2. If the sole proprietor is a consignee, it is necessary to ensure that -
a. Stock held on behalf of consignor, is not treated as own stock.
b. Expenses incurred on behalf of consignor are not treated as own expenses.
c. Sale proceeds on behalf of consignor are not treated as own sales.
d. Goods received from consignor are not treated as own purchases.
4. Goods used by the Proprietor: Proprietor may withdraw the goods out of business stock for his
personal use. In this case goods are valued at cost and the following accounting entry is passed:
Proprietor's Drawings A/c ... Dr.
To Purchases/Trading Account
Notes:
1. The goods withdrawn are considered at cost, as one cannot earn profit by selling goods to himself.
If however the market price is lower than the cost, it is appropriate to value the goods at its market
price.
2. It is necessary to ensure that personal expenses are not treated as business expenses. This is based
on “Business Entity Concept”.
5. Goods or articles distributed as free samples: Goods distributed as free samples are valued at its cost
price and treated as Advertisement Expenses.
Accounting Entry -
Advertisement A/c ...... Dr.
To Purchases/Trading Account
6. Goods lost in Transit/Abnormal Loss: Abnormal loss being a non-recurring loss is shown separately in
the final accounts. This loss does not affect the gross profit e.g. Goods destroyed/damaged by fire, goods
damaged due to bad packing, goods lost in transit etc.
Accounting Entries:
Sr.
Transactions Accounting Entry
No.
1. Cost of abnormal loss Abnormal loss A/c …….. Dr.
To Purchases/Trading A/c
2. Settlement of insurance claims, Bank A/c …….. Dr.
sale of damaged goods etc. To Abnormal Loss Account
3. Transfer of net loss Profit & Loss A/c …….. Dr.
To Abnormal Loss Account
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CA – FOUNDATION: PRINCIPLES & PRACTICE OF ACCOUNTING BY CA. CS. ANSHUL A. AGRAWAL
7. Outstanding Expenses: Under the mercantile system of accounting, revenue expenses are charged on
accrual basis irrespective of its payment. Expenses accrued during the year, not paid before the closing
date are recorded in the books of accounts by passing the following entry -
Respective Expense A/c .... Dr.
To Outstanding Expenses Account
In the subsequent year either the entry is reversed or payment on account of expenses provided for in
earlier year/s debited to ‘Outstanding Expenses A/c’. Thus the balance in outstanding Expenses Account
may represent-
i. Expenses for the earlier year/s not yet paid.
ii. Expenses for the current year provided for.
Note: Short provision or non provision of expenses relating to the earlier year subject to its materiality,
may directly be charged to the proprietor’s Capital Account or shown separately in Profit and Loss
Account.
8. Prepaid Expenses: Expenses paid during the year, a part of which relates to the subsequent year/s are
treated as prepaid expenses e.g. rates and taxes, insurance, subscription, rent etc.
Accounting Entries -
A. On Payment
Respective Expenses A/c ... Dr.
(Relating to Current year)
Prepaid Expenses A/c ...Dr.
(Relating to subsequent year)
To Bank Account
B. Alternatively On Payment
i. Respective Expenses A/c ...Dr.
To Bank Account
ii. Provision for prepaid expenses on closing date
Prepaid Expenses A/c ... Dr.
To Respective Expenses Account
Note: In the subsequent year/s prepaid expenses are transferred to an appropriate revenue expense
account.
9. Outstanding Income: Income accrued during the year, but not received before the closing date is
adjusted in the books of accounts e.g. Interest on Investment, Rent, Commission etc.
Balance in Outstanding Income Account may comprise of -
i. Income accrued but not due.
ii. Income accrued and due but not received.
Accounting Entry -
Outstanding Income A/c ... Dr.
To Respective Income Account
Note: In the subsequent accounting year the entry is reversed or Income received relating to earlier year
is credited directly to “Outstanding Income Account”.
-: 163 :-
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10. Miscellaneous Stock of Stationery, Stamps etc.: Generally when stamps are purchased, it is debited to
Postage Account. Similarly purchase of Stationery or payment towards printing material is debited to
respective expenses account. In this case stock of postal stamps/stationery/printing material etc. on the
closing date may be accounted for-
Accounting Entry -
Postal Stamps on Hand A/c .. Dr.
Stock of printing/stationery etc. A/c ... Dr.
To Respective Expenses Account
In the subsequent year, the entry is reversed.
Note: If expenses is accounted for on usage/consumption basis, no special accounting treatment is
necessary.
11. Bad debts: Bad debt occurs in the business and has to be written off from the books of accounts.
Accounting Entry -
Bad debts A/c .. Dr.
To Customer’s Account
Bad debts written off during the year appear in Trial Balance. Write off of additional bad debts may be
given by way of an adjustment.
12. Provision / Reserve for Bad and Doubtful Debts Account (RDD): In addition to bad debts written off
during the year, provision to meet possible losses on account of bad debts is also necessary, provision for
doubtful debts is made either on specific debts or by way of a certain percentage on total outstanding
debts.
Accounting Entry -
Profit and Loss A/c .... Dr.
To Reserve/Provision for Doubtful Debts Account
As a customary practice the balance of ‘RDD A/c‘ is deducted from Sundry Debtors in the Balance-Sheet
Asset side.
If there is a balance in ‘RDD A/c’ at the beginning of the year, charge to Profit and Loss Account is
determined as follows –
Particulars Rs.
Bad debts .......
Add: New RDD (at the close) .......
.......
Less: Old RDD (at the beginning) .......
Debit to Profit & Loss Account .......
Or
Provision for Bad & Doubtful Debts A/c.
Particulars Rs. Particulars Rs.
By Balance b/d
To Bad Debts ....... By Profit & Loss A/c. .......
To Balance C/d. ....... (Balancing figure) .......
Total Total
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CA – FOUNDATION: PRINCIPLES & PRACTICE OF ACCOUNTING BY CA. CS. ANSHUL A. AGRAWAL
If old RDD balance is more than Bad debts written off and New RDD, excess Provision is transferred to
Profit and Loss Account.
Particulars Rs.
Old RDD .......
Less: Bad debts .....
New RDD .....
.......
Transfer to Profit and Loss A/c .......
Or
Provision for Bad & Doubtful Debts A/c.
Particulars Rs. Particulars Rs.
By Balance .......
To Bad Debts ....... b/d
To Profit & Loss A/c. .......
To Balance C/d. .......
Total Total
Notes:
i. Old RDD A/c balance (Cr.) always appears in Trial Balance.
ii. In adjustment, it may be given that increase RDD by Rs. ……....
In this case - New RDD = Old RDD + Desired Increase in provision
iii. New RDD is always created on Sundry Debtors balance, after writing off Bad debts and other
adjustment given below the Trial Balance.
13. Reserve/Provision for discount on debtors: Cash discount is allowed on prompt payments made by
the customer. Discount allowed during the year appears in Trial Balance and is transferred to Profit and
Loss Account. In addition to discount allowed during the year, provision for possible discount on
outstanding debtors which may have to be allowed may be made on the closing date by way of certain
percentage on closing balance in debtors account.
Accounting Entry -
Profit and Loss Account ... Dr.
To Reserve / Provision for discount on debtors
As a customary practice, balance of ‘Reserve/Provision for discount on debtors is deducted from sundry
debtors in the Balance Sheet Asset side.
If there is a balance in Reserve/Provision for discount at the beginning of the year, charge to Profit and
Loss Account is determined as follows -
Particulars Rs.
Discount allowed during the year .......
Add: New Provision/Reserve .......
.......
Less: Old Provision / Reserve .......
Transfer to Profit & Loss A/c .......
Or
-: 165 :-
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Provision for Discount on Debtors A/c.
Particulars Rs. Particulars Rs.
By Balance b/d. .......
To Discount Allowed ....... By Profit & Loss A/c.
To Balance c/d. ....... (Balancing figure) .......
Total Total
Notes:
i. Provision is made on the balance of Sundry Debtors after deducting RDD provision.
ii. In most of the business enterprises discount allowed is accounted for on cash basis.
14. Bad Debts Recovery: This represents realisation of debts which are already written off from the books
of accounts. This item appears in Trial Balance. It is shown on the credit side of profit and loss account. It
is not appropriate to deduct bad debts recovery from Bad debts written off during the year.
15. Provision for discount on creditors: In addition to discount received from suppliers during the year,
provision may be made for discount likely to be received from suppliers dues on the closing date. This
may be provided on the basis of certain percentage on outstanding trade creditors balance.
Accounting Entry:
Provision for discount on creditors A/c ... Dr.
To Profit and loss Account
Provision for Discount on Creditors A/c.
Particulars Rs. Particulars Rs.
To Balance b/d. .......
To Profit & Loss A/c. ....... By Discount recd. .......
By Balance c/d. .......
Total Total
The balance of ‘Provision for discount on creditors is deducted from Sundry Creditors in the Balance
Sheet Liabilities side.;
Note: According to the concept of Prudence, this provision is not justifiable. According to this concept
anticipated loss is considered but anticipated income is ignored.
16. Depreciation: Depreciation is a usual charge to Profit and Loss Account relating to decline in the value of
fixed assets. It is a decrease in value of fixed assets on account of -
i. Wear and tear ii. Efflux of time
iii. Obsolescence iv. Fall in market value
There are different methods of depreciation, amongst which the popular methods are Straight Line
Method and Written Down Value Method.
Accounting Entry:
Depreciation Account ..... Dr.
To Fixed Assets/Provision for Depreciation Account
Notes:
i. If method of depreciation is not specified depreciation may be provided on W. D. V. method.
ii. Depreciation is a timely charge (unless otherwise specified), hence depreciation on assets
purchased during the year should be provided only from the date of purchase/installation/usage
and on assets sold during the year should be provided only upto the date of sale.
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CA – FOUNDATION: PRINCIPLES & PRACTICE OF ACCOUNTING BY CA. CS. ANSHUL A. AGRAWAL
17. Profit / Loss on Sale of Assets: The following accounting entries are passed on sale/disposal of assets -
Sr. Depreciation credited Depreciation credited
Transaction
No. to Asset A/c to Fund A/c
i. Depreciation Depreciation A/c ….... Dr. Depreciation A/c ….... Dr.
To Asset A/c To Provision for Depreciation
A/c
ii. Transfer of cost - Assets Disposal A/c ….... Dr.
To Asset A/c
iii. Transfer of - Provision for Depreciation A/c….... Dr.
Accumulated To Asset Disposal A/c
depreciation
iv. Sale of Asset Bank A/c ….... Dr. Bank A/c ….... Dr.
To Asset A/c To Asset Disposal A/c
v. Profit/Loss on Sale
– Asset A/c ….... Dr. Asset Disposal A/c ….... Dr.
Profit To Profit on sale of Asset To Profit on sale of Asset A/c
A/c
Loss Loss on sale of Asset A/c….... Dr. Loss on sale of Asset A/c ….... Dr.
To Asset A/c To Asset Disposal A/c
Note: In case of exchange of an old asset,
Cost of new asset = Exchange value of an old asset + Additional payment
Accounting Entries:
1. Exchange of old asset with new asset
New Asset A/c ... Dr.
To Old Asset A/c/Asset Disposal A/c
To Vendor A/c
2. Payment to Vendor
Vendor A/c ... Dr.
To Bank A/c
18. Commission payable to Manager based on Profit:
a. Commission payable on Profits before charging such commission
Rate of Commission
= x Net Profit before Commission.
100
b. Commission payable on Profits after charging such commission
Rate of Commission
= x Net Profit before Commission.
100 Rate of commission
OR
X = R (NP - X) R = Rate of Commission
NP = Net Profit before Commission
X = Commission to Manager
19. Capitalisation of Incidental charges or expenses: Following are some of the expenses which are
capitalised -
1. Wages paid for construction of building
2. Wages paid for installation of machinery
3. Freight charges on transportation of machinery
-: 167 :-
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4. Legal charges for acquiring title of the lease
5. Custom duty and clearance charges on consignment of machinery
6. Repair charges resulting in increase in capacity
If these expenses are wrongly treated as revenue expenses, an appropriate rectification entry is
necessary.
20. Income Tax deduction at source from Interest/Dividend: The payer may deduct the tax at source
from interest or dividend, which is being received by a sole proprietor as an income on business asset.
Accounting Entry -
Bank A/c …. Dr.
Drawing A/c …. Dr.
(Tax deducted at source)
To Interest/Income Account (Gross)
21. Rectification of errors: An adjustment may indicate an error in the books of accounts. In this case an
appropriate rectification entry is required to be passed. e.g.
i. Omission to record business transaction.
ii. Undercasting or overcasting of subsidiary books of accounts
iii. Sale proceeds of an asset wrongly treated as sales.
iv. Purchase of an asset wrongly treated as revenue purchases
v. Proprietors personal expenses included in business expenses
vi. Amounts received as loan wrongly treated as sundry creditors etc.
vii. Wrong posting
viii. Recording business transaction twice in the books etc.
2. Net Profit = Gross Profit - Administration Expenses - Selling & Distribution Expenses -
Financial Expenses
Gross Profit = Net Profit + Administration Expenses + Selling & Distribution Expenses +
Financial Expenses
3. Cost of Goods Sold = Opening Stock + Purchases + Direct Expenses - Closing Stock
Cost of Goods Sold = Sales - Gross Profit
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CA – FOUNDATION: PRINCIPLES & PRACTICE OF ACCOUNTING BY CA. CS. ANSHUL A. AGRAWAL
9. UNDERSTANDING ACCOUNTS
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CAPITAL ACCOUNT
PARTICULARS AMOUNT PARTICULARS AMOUNT
TOTAL TOTAL
-: 169 :-
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TOTAL TOTAL
TOTAL TOTAL
EXPENSE ACCOUNT
PARTICULARS AMOUNT PARTICULARS AMOUNT
TOTAL TOTAL
INCOME ACCOUNT
PARTICULARS AMOUNT PARTICULARS AMOUNT
TOTAL TOTAL
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CA – FOUNDATION: PRINCIPLES & PRACTICE OF ACCOUNTING BY CA. CS. ANSHUL A. AGRAWAL
Q1. Final Accounts on Cash & Mercantile Basis REG. PAGE NO.
. Below is given Trial Balance of Mr. X as on 31.3.2019.
Account Head Debit Credit
Rs. Rs.
Purchases - Payment to suppliers 6,40,000
Sales - Receipts from Customers 4,50,000
Expenses - paid 1,20,600
Interest received 3,750
10% Fixed Deposit with Bank 1,00,000
Furniture & Fixtures 2,50,000
X's Capital 7,00,000
X's Drawings 43,150 __________
Total 11,53,750 11,53,750
Additional information:
i. Outstanding Balances as on 31.3.2019: Rs.
Sundry Debtors 4,90,000
Sundry Creditors 43,500
Outstanding Expenses 10,600
Pre-paid Expenses 3,940
Interest accrued on Fixed Deposit 1,250
ii. Provide depreciation on furniture & fixtures @ 10% under Written Down Value Method
iii. Stock as on 31.3.2019 Rs. 1,26,900
Prepare Trading and Profit and Loss Account for the first financial year ended on 31.3.2019 and Balance
Sheet as on that date under -
1. Cash System of Accounting
2. Mercantile System of Accounting
-: 171 :-
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Q4. Salary Accrual REG. PAGE NO.
Find out Salaries chargeable to Profit and Loss Account for the year ended 31.3.2018.
Rs.
Salaries outstanding 1.4.2017 1,30,000
Salaries paid during the year 16,80,970
Salaries outstanding 31.3.2018 1,45,000
Q5. Bank Loan movement & Accrual of Interest REG. PAGE NO.
From the following information find out interest on term loan to be charged to Profit & Loss Account
Trial Balance as on 31.3.2018
Account Head Debit (Rs.) Credit (Rs.)
12% Bank of India Loan 25,00,000
Interest on loan 1,50,000
During the year an additional loan of Rs. 5,00,000 was obtained on 1.7.2017 and loan installment of Rs.
2,00,000 was repaid on 31.12.2017.
Q6. CA-F N’19 Exam Q3(b) 5M: Incomplete Figure Question REG. PAGE NO.
Mr. Fazhil is a proprietor in the business of trading. An abstract of his Trading and Profit & Loss Account
is as follows:
Selling expenses amounts to 1% of total sales. You are required to compute the missing figures.
Q7. CA-F M’19 Exam Q4(b) 10M: Complete Question REG. PAGE NO.
Q8. CA-F M’19 Exam Q3 20M: Complete Figure Question REG. PAGE NO.
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CA – FOUNDATION: PRINCIPLES & PRACTICE OF ACCOUNTING BY CA. CS. ANSHUL A. AGRAWAL
Q9. CA-F N’19 Exam Q5(c) 10M: Complete Question REG. PAGE NO.
The Balance Sheet of Mittal on 1st January 2018 was as follows:
During 2018, his profit and loss account revealed a net profit of Rs. 15,10,000. This was after
allowing for the following:
(i)Interest on capital @6% p.a.
(ii)Depreciation on plant and machinery @ 10% p.a. and on Furniture and Fixtures@5%p.a.
(iii)A provision for Doubtfuldebts@5% of the trade receivables as at31stDecember2018.
But while preparing the profit and loss account he had forgotten to provide for
(1) outstanding expenses totalling Rs. 1,85,000 and
(2) prepaid insurance to the extent ofRs. 25,000.
His current assets and liabilities on 31stDecember, 2018 were: Trade receivables Rs. 21,00,000;
Cash at bank Rs. 5,20,000 and Trade payablesRs. 13,84,000. During the year he withdrew Rs. 6,20,000
for domestic use. Closing inventories is equal to net trade receivables at the year-end.
You are required to draw up revised Profit and Loss account and Balance Sheet at the endof the
year.
-: 173 :-
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Q11. Manufacturing Account REG. PAGE NO.
Mr. Pankaj runs a factory which produces motor spares of export quality. Following details are available
in respect of his manufacturing activities for the year on 31st March 2016.
WIP Opening 3,90,000
Closing 5,07,000
Raw Materials Purchases 12,10,000
Opening 3,02,000
Closing 3,10,000
Returned 18,000
Indirect Material 16,000
Wages Direct 2,10,000
Indirect 48,000
Direct Expenses Royalty on Production 1,30,000
Repairs and Maintenance 2,30,000
Depreciation on Factory Shed 40,000
Depreciation on Plant and Machinery 60,000
Sales Proceeds of By-Product 20,000
Required: Prepare a Manufacturing account of Mr. Pankaj for the year ended 31st March 2016.
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CA – FOUNDATION: PRINCIPLES & PRACTICE OF ACCOUNTING BY CA. CS. ANSHUL A. AGRAWAL
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