ZeePedia Add to Favourites   |   Contact us


Financial Accounting

<<< Previous Financial Statements Of Manufacturing Concern Next >>>
 
img
Financial Accounting (Mgt-101)
VU
Lesson-33
Financial Statements Of Manufacturing Concern
In this lecture, we will discuss financial statements of manufacturing concern. In manufacturing concern,
cost of goods sold statement is also prepared.
ILLUSTRATION #1
Following trial balance has been extracted from the books of Hassan Manufacturing Concern on June 30,
2002.
Hassan Manufacturing Concern
Trial balance as on June 30, 2002
Particulars
Amount
Amount
Dr. (Rs.)
Cr. (Rs.)
Raw Material stock Jul. 01, 2001
35,500
Work in process Jul. 01, 2001
42,000
Finished goods stock Jul. 01, 2001
85,000
Raw material purchased
250,000
Wages
180,000
Freight inward
12,000
Plant and machinery
400,000
Office equipment
45,000
Vehicles
200,000
Acc. depreciation Plant
195,200
Acc. depreciation Office equipment
12,195
Acc. depreciation Vehicles
97,600
Factory overheads
125,000
Electricity
80,000
Salaries
140,000
Salesman commission
120,000
Rent
200,000
Insurance
150,000
General Expense
60,000
Bank Charges
8,500
Discounts Allowed
20,000
Carriage outward
35,000
Sales
1,500,000
Trade Debtors
250,000
Trade Creditors
220,000
Bank
165,000
Cash
110,000
Drawings
175,000
Capital July 01, 2001
863,005
Total
2,888,000
2,888,000
217
img
Financial Accounting (Mgt-101)
VU
Notes:
 Stock on June 30, 2002.
o  Raw Material
42,000
o  Work in Process
56,500
o  Finished Goods
60,000
 50% of electricity, insurance and salaries are charged to factory and balance to office.
 Depreciation to be charged on Plant & Machinery at 20%, Office Equipment at 10% and Vehicles
at 20%on WDV.
 Write off bad debts Rs. 30,000.
 All the wages are direct.
Required:
You are required to prepare profit and loss account for the year and balance sheet as on june30, 2002.
SOLUTION
Profit & Loss Account
Hassan Manufacturer Concern
Profit and Loss Account for the Year Ending June 30, 2002
Particulars
Note
Amount Rs.
Sales
1,500,000
Less: Cost of Goods Sold
1
796,960
Gross Profit
703,040
Less: Administrative Expenses
2
518,761
Less: Selling Expenses
3
155,000
Operating Profit
29,279
Less: Bank Charges
8,500
Net Profit Before Tax
20,779
218
img
Financial Accounting (Mgt-101)
VU
Balance Sheet
Hassan Manufacturer Concern
Profit and Loss Account for the Year Ending June 30, 2002
Particulars
Note
Amount Rs.
Fixed Assets at WDV
4
275,284
Current Assets
5
653,500
Current Liabilities
6
(220,000)
Working Capital
433,500
Total Assets Employed
708,784
Financed by:
Capital
863,005
Add: Profit for the year
20,779
Less: Drawings
(175,000)
Total Liabilities
708,784
Notes to the Accounts
Note # 1
Cost of Goods Sold
Stock of Raw Material Jul 01, 2001
35,500
Add. Purchases
250,000
Add. Freight Inward
12,000
297,500
Less: Closing Stock of Raw Material
(42,000)
Raw Material Consumed
255,500
Direct labour
180,000
Factory Overheads
Factory Overheads
125,000
Electricity (50% of 80,000)
40,000
Salaries (50% of 140,000)
70,000
Insurance (50% of 150,000)
75,000
350,960
Plant Depreciation (Note 5)
40,960
Total Factory Cost
786,460
Add: Work in Process Jul 01, 2001
42,000
Less: Work in Process Jun 30, 2002
(56,500)
Cost of Goods Manufactured
771,960
Add: Finished Goods Stock Jul 01, 2001
85,000
Less: Finished Goods Stock Jun 30, 2002
(60,000)
Cost of Goods Sold
796,960
219
img
Financial Accounting (Mgt-101)
VU
Note # 2
Administrative Expenses
Salaries (50% of 140,000)
70,000
General Expenses
60,000
Rent
200,000
Insurance (50% of 150,000)
75,000
Discount Allowed
20,000
Bad Debts
30,000
Office Electricity (50% of 80,000)
40,000
Depreciation Vehicles (Note 5)
20,480
Depreciation Office Equip. (Note5)
3,281
Administrative Expenses
518,761
Note # 3
Selling Expenses
Salesman Commission
120,000
Carriage Outward
35,000
Selling Expenses
155,000
Note # 4
Fixed Assets at WDV
Acc. Depreciation
WDV
Cost
Rate
Opening  For the
Closing
Year
Plant and Mach.
400,000
20%
195,200
40,960
236,160
163,840
Vehicles
200,000
20%
97,600
20,480
118,080
81,920
15,476
29,524
Office Equip.
45,000
10%
12,195
3,281
275,284
64,721
Note # 5
Current Assets
Stock
Raw Material
42,000
Work in Process
56,500
158,500
Finished Goods
60,000
Debtors
250,000
Less: Bad Debts
+
(30,000)
Bank
165,000
Cash
110,000
Current Assets
653,500
Note # 6
220
img
Financial Accounting (Mgt-101)
VU
Current Liabilities
Trade Creditors
220,000
ILLUSTRATION # 2
Following trial balance has been extracted from the books of Javed Furniture Manufacturers on June 30,
2002.
Javed Furniture Manufacturers
Trial balance as on June 30, 2002
Particulars
Amount
Amount
Dr. (Rs.)
Cr. (Rs.)
Raw Material stock Jul. 01, 2001
52,500
Work in process Jul. 01, 2001
97,250
Finished goods stock Jul. 01, 2001
33,750
Raw material purchased
925,000
Wages
812,500
Freight inward
8,750
Plant and machinery
700,000
Office equipment
50,000
Acc. depreciation Plant
125,000
Acc. depreciation Office equipment
20,000
General factory overheads
77,500
Office electricity
18,750
Factory power
34,250
Salaries administrative staff
110,000
Salaries sales staff
75,000
Salesman commission
28,750
Rent
30,000
Insurance
10,500
General Admin. Expense
33,500
Bank Charges
5,750
Discounts Allowed
12,000
Carriage outward
14,750
Sales
2,500,000
Trade Debtors
355,750
Trade Creditors
312,500
Bank
142,000
Cash
21,250
Drawings
50,000
Capital July 01, 2001
742,000
Total
3,699,500
3,699,500
Notes:
 Stocks on June 30, 2002
o  Raw Material Rs. 60,000
o  Finished Goods Rs. 100,000
o  Work in Process Rs. 37,500.
221
img
Financial Accounting (Mgt-101)
VU
Out of total wages Rs. 450,000 is direct and balance indirect.
80% of Rent and Insurance are to be apportioned to factory and balance to administrative office.
Depreciation to be charged on Machinery at 20% and Office Equipment at 10% on cost.
You are required to prepare profit and loss account for the year and balance sheet as on june30, 2002.
SOLUTION
Javed Furniture Manufacturer
Profit and Loss Account for the Year Ending June 30, 2002
Particulars
Note
Amount Rs.
Sales
2,500,000
Less: Cost of Goods Sold
1
2,016,400
Gross Profit
483,600
Less: Administrative Expenses
2
175,350
Less: Selling Expenses
3
118,500
Operating Profit
189,750
Less: Financial Charges
4
17,750
Net Profit Before Tax
172,000
222
img
Financial Accounting (Mgt-101)
VU
Javed Furniture Manufacturers
Profit and Loss Account for the Year Ending June 30, 2002
Particulars
Note
Amount Rs.
Fixed Assets at WDV
5
460,000
Current Assets
6
716,500
Current Liabilities
7
(312,500)
Working Capital
404,000
Total Assets Employed
864,000
Financed by:
Capital
742,000
Add: Profit for the year
172,000
Less: Drawings(50,000)
Total Liabilities
864,000
Working 1 ­ Cost of Goods Sold
Stock of Raw Material Jul 01, 2001
52,500
Add. Purchases
925,000
Add. Carriage Inward
8,750
986,250
Less: Closing Stock of Raw Material
(60,000)
Raw Material Consumed
926,250
Direct labour
450,000
Factory Overheads
General Factory Overheads
77,500
Power
34,250
Rent (80%
of 30,000)
24,000
Insurance (80% of 10,500)
8,400
Plant dep. On cost (Note 5)
140,000
646,650
Indirect Labour
362,500
Total Factory Cost
2,022,900
Add: Work in Process Jul 01, 2001
97,250
Less:
Work in Process Jun 30, 2002
(37,500)
Cost of Goods Manufactured
2,082,650
Add: Finished Goods Stock Jul 01, 2001
33,750
Less: Finished Goods Stock Jun 30, 2002
(100,000)
Cost of Goods Sold
2,016,400
223
img
Financial Accounting (Mgt-101)
VU
Working 2 ­ Administrative Expenses
Administrative Salaries
110,000
Rent (20% of 30,000)
6,000
Insurance (20% of 10,500)
2,100
General Admin Expenses
33,500
Office Electricity
18,750
Depreciation Office Equip. (Note5)
5,000
Administrative Expenses
175,350
Working 3 ­ Selling Expenses
Salesman's Salary
75,000
Commission on Sales
28,750
Carriage Outward
14,750
Selling Expenses
118,500
Working 4 ­ Financial Expenses
Bank Charges
5,750
Discount Allowed
12,000
Financial Expenses
17,750
Working 5 ­ Fixed Assets at WDV
Acc. Depreciation
WDV
Cost
Rate  Opening  For the
Closing
Year
Plant and Mach.
700,000 20%  125,000  140,000
265,000
435,000
25,000
25,000
Office equipment.
50,000 10%  20,000
5,000
460,000
145,000
Working 6 ­ Current Assets
Stock
Raw Material
60,000
Work in Process
37,500
Finished Goods
100,000
Debtors
355,750
Bank
142,000
Cash
21,250
Current Assets
716,500
Working 7 ­ Current Liabilities
Creditors
312,500
224
Table of Contents:
  1. Introduction to Financial Accounting
  2. Basic Concepts of Business: capital, profit, budget
  3. Cash Accounting and Accrual Accounting
  4. Business entity, Single and double entry book-keeping, Debit and Credit
  5. Rules of Debit and Credit for Assets, Liabilities, Income and Expenses
  6. flow of transactions, books of accounts, General Ledger balance
  7. Cash book and bank book, Accounting Period, Trial Balance and its limitations
  8. Profit & Loss account from trial balance, Receipt & Payment, Income & Expenditure and Profit & Loss account
  9. Assets and Liabilities, Balance Sheet from trial balance
  10. Sample Transactions of a Company
  11. Sample Accounts of a Company
  12. THE ACCOUNTING EQUATION
  13. types of vouchers, Carrying forward the balance of an account
  14. ILLUSTRATIONS: Ccarrying Forward of Balances
  15. Opening Stock, Closing Stock
  16. COST OF GOODS SOLD STATEMENT
  17. DEPRECIATION
  18. GROUPINGS OF FIXED ASSETS
  19. CAPITAL WORK IN PROGRESS 1
  20. CAPITAL WORK IN PROGRESS 2
  21. REVALUATION OF FIXED ASSETS
  22. Banking transactions, Bank reconciliation statements
  23. RECAP
  24. Accounting Examples with Solutions
  25. RECORDING OF PROVISION FOR BAD DEBTS
  26. SUBSIDIARY BOOKS
  27. A PERSON IS BOTH DEBTOR AND CREDITOR
  28. RECTIFICATION OF ERROR
  29. STANDARD FORMAT OF PROFIT & LOSS ACCOUNT
  30. STANDARD FORMAT OF BALANCE SHEET
  31. DIFFERENT BUSINESS ENTITIES: Commercial, Non-commercial organizations
  32. SOLE PROPRIETORSHIP
  33. Financial Statements Of Manufacturing Concern
  34. Financial Statements of Partnership firms
  35. INTEREST ON CAPITAL AND DRAWINGS
  36. DISADVANTAGES OF A PARTNERSHIP FIRM
  37. SHARE CAPITAL
  38. STATEMENT OF CHANGES IN EQUITY
  39. Financial Statements of Limited Companies
  40. Financial Statements of Limited Companies
  41. CASH FLOW STATEMENT 1
  42. CASH FLOW STATEMENT 2
  43. FINANCIAL STATEMENTS OF LISTED, QUOTED COMPANIES
  44. FINANCIAL STATEMENTS OF LISTED COMPANIES
  45. FINANCIAL STATEMENTS OF LISTED COMPANIES