Final Accounts of a Manufacturing Company The following balances were extracted from the books of Stewart Ltd as at 31/12/2019: Share capital         Authorised - 900,000 ordinary shares at €1 each         Issued - 620,000 ordinary shares at €1 each         Delivery vans (cost €82,000)         Factory equipment (cost €450,000)         Factory buildings         Patent Stock 01/01/2019:         Raw materials         Work in progress         Finished goods Purchase of raw materials Sales Returns inwards (sales returns) Factory light and heat Sale of scrap materials Stationery Factory wages Direct expenses Advertising 10% Debentures (issued 01/04/2019) Creditors Debtors Provision for bad debts VAT Factory insurance Bank Profit and loss balance 01/01/2019 You are given the following additional information: (i) Stock at 31/12/2019:         raw materials €45,000         work in progress €20,000         finished goods €50,000 (ii) Stock of stationery at 31/12/2019 €600 - Leaving Cert Accounting - Question 1 - 2020

To prepare the trading and profit and loss account, start by calculating the sales:

• Sales: €876,900
• Less: Sales Returns: €13,000

The net sales would be:

$ext{Net Sales} = ext{Sales} - ext{Sales Returns} = 876,900 - 13,000 = 863,900$

Next, calculate the cost of sales:

• Opening Stock of Finished Goods: €50,000
• Add: Cost of Manufacture: €516,900
• Less: Closing Stock of Finished Goods: €50,000

The cost of sales is:

$ext{Cost of Sales} = ext{Opening Stock} + ext{Cost of Manufacture} - ext{Closing Stock}$

$ext{Cost of Sales} = 50,000 + 516,900 - 50,000 = 516,900$

• Gross Profit: Net Sales - Cost of Sales

$ext{Gross Profit} = 863,900 - 516,900 = 347,000$

Next, record the expenses:

• Less Expenses:
  • Administrative Expenses (Stationery): €7,400
  • Advertising: €6,000
  • Selling and Distribution: €14,500

Total expenses are summed:

$ext{Total Expenses} = 7,400 + 6,000 + 14,500 = 27,900$

Finally, calculate the net profit:

$ext{Net Profit} = ext{Gross Profit} - ext{Total Expenses}$

$ext{Net Profit} = 347,000 - 27,900 = 319,100$

To prepare the balance sheet:

Intangible Assets

• Patents: €80,000

Fixed Assets

• Factory Buildings: €672,600
• Factory Equipment: €232,500
• Delivery Vans: €27,000

Total Fixed Assets:

$ext{Total Fixed Assets} = 672,600 + 232,500 + 27,000 = 932,100$

Current Assets

• Closing Stocks:
  • Raw Materials: €45,000
  • Work in Progress: €20,000
  • Finished Goods: €50,000
• Stock of Stationery: €600
• Debtors: €72,000
• Less Bad Debt Provision: €3,800
• Advertising Prepaid: €1,500
• Bank: €48,200

Total Current Assets:

$ext{Total Current Assets} = 45,000 + 20,000 + 50,000 + 600 + 72,000 - 3,800 + 1,500 + 48,200 = 234,200$

Total Assets

• Total Assets:

$ext{Total Assets} = ext{Total Fixed Assets} + ext{Total Current Assets}$

$ext{Total Assets} = 932,100 + 234,200 = 1,166,300$

Liabilities

• Creditors: €93,000
• Corporation Tax: €24,000
• VAT: €15,000

Total Liabilities:

$ext{Total Liabilities} = 93,000 + 24,000 + 15,000 = 132,000$

Financed By

• 10% Debentures: €150,000
• Ordinary Share Capital: €620,000
• Profit and Loss Account: €235,550

Total Capital Employed:

$ext{Total Capital} = 150,000 + 620,000 + 235,550 = 1,005,550$

Finally, ensure that Total Assets = Total Liabilities + Capital.