Gugusan Manufacturing, a family-owned business involved with producing stickers for home and office use, has the following balances extracted from its books on 31 December 2022: Name of Accounts RM RM Raw materials, 1 January 2022 30,400 Raw materials purchases 125,600 Transportation of raw materials 8,500 Custom duties on raw materials 2,800 Factory wages 223,300 Rent 96,000
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Gugusan Manufacturing, a family-owned business involved with producing stickers for home
and office use, has the following balances extracted from its books on 31 December 2022:
Name of Accounts RM RM
Raw materials, 1 January 2022 30,400
Raw materials purchases 125,600
Transportation of raw materials 8,500
Custom duties on raw materials 2,800
Factory wages 223,300
Rent 96,000
Depreciation of motor vehicles 36,000
Oils and lubricants 1,800
Factory supervisory’s salary 38,400
General manager’s salary 80,000
General expenses 6,000
Utilities expenses 24,000
Factory repairs and maintenance 4,800
Sales returns 9,500
Finished goods, 1 January 2022 58,300
Advertising expense 10,500
Salesmen’s commissions 32,700
Salesmen's salaries 48,000
Repairs to motor vehicles 12,000
Selling expense 4,600
Office wages & salaries 63,800
Depreciation of office furniture 5,000
Discounts allowed 8,400
Bad debts expense 6,400
Drawings 80,000
Freehold land & buildings 2,135,000
Plant & machinery 261,300
Motor vehicles 231,300
Accounts receivable 45,000
Bank 8,500
Cash 3,000
Capital, 1 January 2022 2,190,500
Mortgage on land & buildings 150,000
Mortgage on plant & machinery 30,000
Accounts payable 76,400
Accrued expenses payable 10,000
Sales 1,250,000
Discounts received 14,400
Returns on raw materials 3,200
On 31 December 2022, the following information was given:
• 85% of the rent expense should be allocated to the factory and the remainder to the office.
• 2/3 of the depreciation of motor vehicles is considered related to the factory while the rest
is for the transportation of finished goods.
• 3/8 of the manager’s salary is related to factory work while the rest are to do with office
work.
• 75% of the general expenses are for the production of goods while the remainder is for
administrative purposes.
• 10% of the utilities are for the office while the remainder is for the factory.
• The repairs to motor vehicles should be allocated on the same basis as the depreciation of
motor vehicles.
• The ending stock of raw materials is estimated to be RM24,900.
• The ending stock of finished goods is valued at RM78,300.
Required:
(a) Prepare Statement of Cost of Production for the year ended 31 December 2022.
(b) Prepare Statement of Profit or Loss and Other Comprehensive Income for the year
ended 31 December 2022.
(c) Prepare Statement of Financial Position as at 31 December 2022.
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