The following balances were extracted from the books of B Manufacturing on 30 September 2019. Inventory at 1 October 2018 $ Raw materials 7900 Work in progress 18000 Finished goods 31000 Capital 160000 Drawings 50000 Revenue 475000 Purchases of raw materials 47000 Purchases of finished goods 71000 Production management salaries 29 500 Administrative wages and salaries 117550 Factory wages 55300 Insurance 9000 Rent payable 30000 Commission receivable 8750 Direct expenses 10100 General expenses 12000 Building repairs 18000 Selling and distribution expenses 14200 Trade payables 21 900 Bank 11100 Debit Non-current assets (at cost) Factory machinery 90000 Office fixtures 70000 Provisions for depreciation at 1 October 2018 Factory machinery 26000 Office fixtures 36000 Provision for doubtful debts 6000 Trade receivables 42000 Additional information at 30 September 2019 1 Inventory $ Raw materials 6400 Work in progress 20 200 Finished goods 34 300 2 Expenses are to be apportioned to the factory and the office as follows: Factory Office Insurance 60% 40% Rent payable 75% 25% General expenses 10% 90% Building repairs 70% 30% 3 Commission receivable of $1200 was due. 4 Selling and distribution expenses prepaid were $750. 5 Depreciation is to be charged on all non-current assets owned at the end of the year as follows. factory machinery at 20% per annum using the diminishing (reducing) balance method office fixtures at 10% per annum using the straight-line method. 6 The provision for doubtful debts is to be maintained at the rate of 5%. 7 A cheque, $2800, paid to a trade payable had not been recorded in the books. REQUIRED

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2019). The mark or mark type is shown in brackets.

1. [1] Raw materials inventory 1 October 2018 $7 900
2. [1] Purchases of raw material $47 000
3. [1] Total $54 900
4. [1] Raw materials inventory 30 September 2019 ($6 400)
5. [1] Cost of raw materials consumed $48 500
6. [1] Factory wages $55 300
7. [1] Direct expenses $10 100
8. [1] Prime cost $113 900 (OF)
9. [1] Factory overheads
10. [1] Insurance ($9000 * 0.6) = $5 400
11. [1] Rent ($30000 * 0.75) = $22 500
12. [1] General expenses ($12000 * 0.1) = $1 200
13. [1] Building repairs ($18000 * 0.7) = $12 600
14. [1] Production management salaries $29 500
15. [1] Depreciation-machinery: (Cost $90000 - Prov $26000) * 0.20 = $12 800
16. [1] Total factory overheads $84 000
17. [1] Total manufacturing cost $197 900
18. [1] Work in progress At 1 October 2018 $18 000
19. [1] Work in progress At 30 September 2019 ($20 200)
20. [1] Cost of production $195 700 (OF)
21. [1] Revenue $475 000
22. [1] Less Inventory of finished goods 1 October 2018 $31 000
23. [1] Cost of production $195 700 (OF)
24. [1] Purchases of finished goods $71 000
25. [1] Subtotal goods available for sale $297 700
26. [1] Inventory of finished goods 30 September 2019 ($34 300)
27. [1] Cost of sales ($263 400) (OF)
28. [1] Gross profit $211 600
29. [1] Commission receivable ($8750 + $1200) = $9 950
30. [1] Decrease in provision for doubtful debts ($6000 - ($42000 * 0.05)) = $3 900
31. [1] Total other income $13 850
32. [1] Total available for expenses $225 450
33. [1] Less expenses:
34. [1] Insurance ($9000 * 0.4) = $3 600
35. [1] Rent ($30000 * 0.25) = $7 500
36. [1] General expenses ($12000 * 0.9) = $10 800
37. [1] Building repairs ($18000 * 0.3) = $5 400
38. [1] Administrative wages and salaries $117 550
39. [1] Selling and distribution expenses ($14200 - $750) = $13 450
40. [1] Depreciation – office fixtures ($70000 * 0.1) = $7 000
41. [1] Total expenses ($165 300)
42. [1] Profit for the year $60 150
43. [1] Non-current assets
44. [1] Machinery: Cost 90000, Accumulated depreciation (26000 + $12800) = $38800, Net book value $51200 (OF)
45. [1] Office fixtures: Cost 70000, Accumulated depreciation (36000 + $7000) = $43000, Net book value $27000 (OF)
46. [1] Total Net book value of non-current assets $78 200
47. [1] Current assets
48. [1] Inventory: Raw materials $6400, Work in progress $20200, Finished goods $34300. Total $60 900
49. [1] Trade receivables $42000
50. [1] Provision for doubtful debts ($42000 * 0.05) = ($2 100) (OF)
51. [1] Net trade receivables $39 900 (OF)
52. [1] Other receivables ($1200 (due) + $750 (prepaid)) = $1 950
53. [1] Bank ($11100 (from TB) - $2800 (unrecorded cheque)) = $8 300
54. [1] Total Current Assets $111 050
55. [1] Total Assets $189 250
56. [1] Capital and Liabilities
57. [1] Capital $160 000
58. [1] Profit for the year $60 150
59. [1] Total $220 150
60. [1] Drawings ($50 000)
61. [1] Capital Account Balance $170 150 (OF)
62. [1] Current liabilities
63. [1] Trade payables ($21900 (from TB) - $2800 (unrecorded cheque)) = $19 100
64. [1] Total Capital and Liabilities $189 250