China Toys manufacturing company Ltd. had a fire thatcompletely destroyed the fa

Question

China Toys manufacturing company Ltd. had a fire thatcompletely

destroyed the factory premises. Only few accounting recordsthat could be

saved reveal following information:

Items                                                          Rs.

Sales                                                      218,800

Financialexpenses                                     600

Cost of goodsavailable forsale                 200,000

Raw materialpurchased                              90,000

DirectLabor                                              35,000

Salesreturn                                                 2,800

BalanceSheet of previous year contains the following inventorybalances:

Items                                        Rs.

Work in processinventory          70,000

Materialinventory                      8,000

Finished goodsinventory             50,000

Accountant of thecompany on the basis of his past experience presented followingpercentage

relationship:

Sellingexpenses                  5% of Net Sales

Primecost                            60% of Cost of Goods Manufactured

Administrativeexpenses                  8% of Net Sales

Factoryoverhead                      30% of Conversion Cost

Grossprofit                               30% of Net Sales

Required

· Prepare Cost of Goods Sold Statementfor the year ended Dec 31st, 2009by

adjustingthe closing inventories of work in process, finished goodsand

material.Also show complete working where required.

· Income statement for the year endedDec 31st,2009.

Explanation / Answer

x.H

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