PART 1 (10 marks: 18minutes) These balances and totals are from Mark and Brake L
ID: 2550350 • Letter: P
Question
PART 1 (10 marks: 18minutes)
These balances and totals are from Mark and Brake Ltd who manufactures sport equipment:
Inventory: 1 March 20x7
Raw material
14 400
Work-in progress (WIP)
9 500
Finished goods
52 000
Delivery vehicle at cost
19 000
Plant and machinery at cost
120 000
Office furniture at cost
6 000
Bank
11 400
Accumulated depreciation on 1 March 20x7:
Delivery vehicles
3 800
Plant and Machinery
36 000
Office furniture
1 200
Water and electricity:
Factory
6 200
Office
320
Purchase of raw material
144 000
Customs duty on raw material
3 400
Freight in on raw material
7 200
Insurance paid :
Factory
2 520
Office
840
Insurance paid in advance 1 March 20x7
Factory
960
Office
260
Allowance for bad debts on 1 March 20x7
830
Account receivable
16 600
Factory wages
73 000
Indirect labour
9 600
Salaries:
Sale personnel
17 40
Office personnel
11 600
Factory overheads
4 560
Stationary
760
Sales
260 400
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Additional information:
1. Inventory on hand 28 February 20x8:
Raw material R13 400
Work – in- progress R10 700
Finished goods R60 000
2. Depreciation should be provided for on the reducing-balance method:
Delivery vehicle 20% p.a.
Plant and machinery 15%p.a.
Office furniture 5%p.a
3. Insurance is payable one year in advance on 1 July.
4. Finished goods are transferred from the factory to the sales department at production cost plus 25%
You are required to:
Prepare a work – in – progress inventory account for the year ended 28 February 20x8. (10 marks)
Explanation / Answer
Answer
WORK-IN -PROCESS INVENTORY ACCOUNT:
Raw materials used = 14400+144000+3400+7200-13400 =155600
Manufacturing overhead expenses =(120000-36000)*0.15 + 6200+2520+9600+4560+(920*8/12) =36093
Particulas Dr Particulars Cr Beginning Balance 9500 Finished goods Inventory(Transfer) 263493 Raw material inventory 155600 Ending Balance 10700 Factory wages 73000 Manufacturing overhead 36093 274193 274193Related Questions
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