13 FINAL ACCOUNTS


Question 11 Moon Ltd, a manufacturing company, has authorised capital of €600,000, divided into 400,000 Ordinary Shares at €1 each and 200,000 6% Preference Shares at €1 each. The following Trial Balance is an extract from its books as at 31/12/2012.


€


Factory Buildings (cost €400,000) Plant and Machinery (cost €250,000) Discount (Net)


P & L Balance 01/01/2012


Stock on hand 01/01/2012 Finished Goods Raw Materials


Work in Progress Sales Patents


Carriage on Raw Materials Hire of Special Equipment Purchase of Raw Materials Dividends Paid


Sale of Scrap Material Debtors and Creditors Bank


Direct Factory Wages Selling Expenses


8% Debentures (including €50,000 issued on 01/04/2012)


Issued Share Capital Ordinary Shares


6% Preference Shares


General Factory Overheads VAT


Debenture Interest paid Administration expenses (including Suspense)


50,700 2,500


60,000 1,632,700 1,632,700


The following information and instructions are to be taken into account: (i) Stock on hand on 31/12/2012: a) Finished goods €80,000 b) Raw Materials €50,000 c) Work in Progress €35,000


(ii) The figure for finished goods includes items which cost €5,000 to produce, but now have a sales value of €4,000. (iii)


13


Included in the figure for sale of scrap material is €1,000 received from the sale of an old machine on 30/03/2012. This machine had cost €20,000 on 01/01/2010. The cheque had been entered in the bank account. This was the only entry made in the books.


(iv) The suspense figure arises as a result of discount allowed €600 entered only in the debtors account. (v) It was discovered that finished goods, which cost €12,000 to produce, were given to a customer on a sale or return basis. These goods had been entered in the books as a credit sale at cost plus 20%.


(vi) On 01/01/2012, the buildings were revalued to €450,000. During 2012, Moon Ltd built an extension onto their premises. The work was carried out by the company’s own employees. The cost of their labour €40,000 was included in factory wages. The cost of materials used €18,000 was included in purchases. No entry was made in the books in respect of this extension.


(vii) Goods should be transferred from factory at current market value €900,000. (viii) Depreciation is provided on fixed assets as follows: a) Plant and Machinery @ 20% of cost per annum from date of purchase to date of sale. b) Factory Buildings @ 2% of cost on 31/12/2012.


(ix) The Directors are proposing that: a) Provision should be made for debenture interest. b) Corporation tax of €9,000 is to be provided for.


You are required to prepare a: (a) Manufacturing, Trading and Profit and Loss Account for the year ended 31/12/2012. (b) Balance Sheet as at 31/12/2012.


202


40,000 2,000


12,000


400,000 18,000


6,700


90,000 24,500


100,000 70,000


150,000 300,000


200,000 10,000


60,000


Preference Shareholders get 6% as dividend.


350,000 200,000


6,000


70,000 70,000


35,000 38,000


900,000 €


TIP


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