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Process 1 and process 2 account  ii. Abnormal loss and / or gain account  iii. Scrap account

Process 1 and process 2 account  ii. Abnormal loss and / or gain account  iii. Scrap account

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Prepare the following accounts for the week just ended
i. Process 1 and process 2 account 
ii. Abnormal loss and / or gain account 
iii. Scrap account 

A company manufacture it main product in two different consecutive processes, process 1 and process 2. The output from process 1 is transferred to process 2 the output of process 2 is sent to the packaging department. Information for the week ended 31 August 2009 is as follows; Process Input Material X 18,00kg @ GH¢11 per kg Material Y 12,000 kg @ GH¢2 per kg Labour 1,720 hours @ GH¢3 per hour Normal loss 5% of input Sales price of scrap GH¢0.32 per kg Output 27,000 kg There was no opening stock but 600 kg of closing work in progress in process 1 at the end of the week which is estimated to be 60% complete with regard to conversion cost. Process 2 Input Material P 19,800 kg @ GH¢2.5 per kg Material Y 12,600 kg @ GH¢1.5 per kg Additives GH¢1,800 Labour 1,480 hours @ GH¢3 per hour Normal loss 5% of input Output 56,000 kg There was no opening WIP but there 3,000 kg in process 2 at the end of the week which is estimated to be 50% complete with regard to labour and overheads. Total overheads of GH¢19,200 was charged to the process and was absorbed on the basis of labour hours. Losses are detected in both processes when it is 75% complete.
Transcribed Image Text:A company manufacture it main product in two different consecutive processes, process 1 and process 2. The output from process 1 is transferred to process 2 the output of process 2 is sent to the packaging department. Information for the week ended 31 August 2009 is as follows; Process Input Material X 18,00kg @ GH¢11 per kg Material Y 12,000 kg @ GH¢2 per kg Labour 1,720 hours @ GH¢3 per hour Normal loss 5% of input Sales price of scrap GH¢0.32 per kg Output 27,000 kg There was no opening stock but 600 kg of closing work in progress in process 1 at the end of the week which is estimated to be 60% complete with regard to conversion cost. Process 2 Input Material P 19,800 kg @ GH¢2.5 per kg Material Y 12,600 kg @ GH¢1.5 per kg Additives GH¢1,800 Labour 1,480 hours @ GH¢3 per hour Normal loss 5% of input Output 56,000 kg There was no opening WIP but there 3,000 kg in process 2 at the end of the week which is estimated to be 50% complete with regard to labour and overheads. Total overheads of GH¢19,200 was charged to the process and was absorbed on the basis of labour hours. Losses are detected in both processes when it is 75% complete.
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