Leaving Cert Accounting FINAL ACCOUNTS - Manufacturing: Company Final Accounts including

Question

Company Final Accounts including a Manufacturing Account
Austin Ltd has an authorised capital of €900,000 divided into 600,000 ordinary shares at €1 each and 300,000 5% preference shares at €1 each. The following trial balance was extracted from the books on 31/12/2017:

Factory buildings (cost €940,000)                     €900,000
Plant and machinery (cost €420,000)                   €255,000
Profit and loss balance 01/01/2017                           €38,000
Sales                                                             €1,400,000
Sale of scrap materials                                            €5,110
Bank                                                               €43,600
Debtors and creditors                                         €62,000
Direct factory wages                                            €200,000
Purchase of raw materials                                    €514,200
Selling expenses                                               €38,000
Administration expenses                                       €59,200
General factory overheads (including suspense)     €102,800
Stocks on hand on 01/01/2017
   Finished goods                                                   €43,100
   Raw materials                                                   €41,500
   Work in progress                                               €38,200
8% Debentures (including €50,000 issued on 01/04/2017)      €300,000
Dividends paid                                                    €27,500
Issued share capital - ordinary shares                    €550,000
                             - 5% preference shares            €250,000
Hire of special equipment                                      €39,800
Discount (net)                                                  €8,000
Royalty payments                                               €26,900
Rent to 30/09/2017                                            €9,000
4% Investments acquired on 01/03/2017              €330,000
PAYE, PRSI & USC                                         €20,700

The following information and instructions are to be taken into account:
(i) Stocks on hand at 31/12/2017: Finished goods €68,100, Raw materials €41,500, Work in progress €40,120.
(ii) It was discovered that finished goods had been sent to a customer on 31/12/2017 on a 'sale or return' basis. These goods had been recorded as a credit sale of €17,500 which is a mark-up on cost of 25%.
(iii) The suspense figure arises as a result of discount allowed €600 entered only in the debtors account and credit purchases of raw materials €60,000 entered on the incorrect side of the creditor account.
(iv) The figure for bank in the trial balance has been taken from the firm's records. However, a bank statement dated 31/12/2017 shows an overdraft of €33,300. A comparison of the bank account and the bank statement revealed the following discrepancies:
   1. A cheque for €1,000 had been lodged directly into the firm’s bank account on behalf of a debtor in respect of a debt previously written off. This represents 40% of the original debt and the debtor has undertaken to repay the remainder in January 2018.
   2. The bank at 31/12/2017 was paid directly into the firm’s bank account.
   3. An entry of €6,300 is missing from the statement and has not been presented for payment.
(v) Provide for a recent wage increase of 5% to be backdated to cover the three months from 01/10/2017.
(vi) During 2017 (January to December) Austin Ltd built an extension to the warehouse. The warehouse was constructed by the company’s own workers at a cost of €30,000. A total of €3,000 (above wage increases) was included in administration costs, €31,500 was taken from stores. No entries had been made in the books in respect of this construction.
(vii) Include in the figure for sale of scrap materials is €3,000 received from the sale of machinery sold on 30/06/2017. This machinery was bought on 01/04/2017.
(viii) Provide for depreciation as follows:
   Plant and machinery: 10% of cost from date of use.
   Buildings: at the cost at 31/12/2017. Depreciation on buildings is to be charged to the factory for the remainder to office administration.
(ix) Provision must be made for:
   The income due from the discounts received and to calculate the amount of the provision for bad debts equal to 6% of debtors on 31/12/2017.

Required:
(a) Prepare a manufacturing, trading and profit and loss account for the year ended 31/12/2017.
(b) Prepare a balance sheet as at 31/12/2017.

Company Final Accounts including a Manufacturing Account Austin Ltd has an authorised capital of €900,000 divided into 600,000 ordinary shares at €1 each and 300,000 5% preference shares at €1 each - Leaving Cert Accounting - Question 1 - 2018

Worked Solution & Example Answer:Company Final Accounts including a Manufacturing Account Austin Ltd has an authorised capital of €900,000 divided into 600,000 ordinary shares at €1 each and 300,000 5% preference shares at €1 each - Leaving Cert Accounting - Question 1 - 2018

Prepare a manufacturing account for the year ended 31/12/2017

Prepare a trading and profit and loss account for the year ended 31/12/2017

Prepare a balance sheet as at 31/12/2017

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