Chapter 20: Manufacturing accounts

6 Farouk started a manufacturing business on 1 April 20–5. He provided the following information:
$
On 1 April 20–5:
Cost of factory machinery 28 000
Cost of factory hand tools 800
Cost of o ice fixtures and fittings 6 500

For the year ended 31 March 20–6:

Purchases of raw materials 22 800
Purchases of finished goods 12 200
Carriage on raw materials 1 300
Revenue 100 400
Wages and salaries – factory operatives 27 200
o ice sta 15 400
factory supervisors 10 400
General expenses 4 800
Rent and rates 5 100

At 31 March 20–6:
Inventory – raw materials 2 520
work in progress 2 140
finished goods 5 210 301
Value of factory hand tools 650

Additional information:
1 The rent and rates and the general expenses are to be apportioned _3 to the factory
2

and _13 to the o ice.

2 The factory machinery is to be deprecated at 25% per annum on cost and the o ice
fixtures and fittings by 10% per annum on cost. No additional non-current assets were
purchased during the year.

a Prepare the manufacturing account for the year ended 31 March 20–6.
b Prepare the income statement for the year ended 31 March 20–6.