You are required: (a) to open the ledger accounts at the commencement of the trading period. (b) Using integrated accounting, to record the transactions for the three months ended 30 April. (c) To prepare, in vertical format, for presentation to management, (i) a profit statement for the period; (ii) the balance sheet at 30 April.
XY Limited commenced trading on 1 February with fully paid issued share capital of £500 000, Fixed
Assets of £275 000 and Cash at Bank of £225 000. By the end of April, the following transactions had taken
place:
1. Purchases on credit from suppliers amounted to£572 500 of which £525 000 was raw materials and £47 500
was for items classified as production
2. Wages incurred for all staff were £675 000, represented by cash paid £500 000 and wage deductions of£175
000 in respect of income tax etc.
3. Payments were made by cheque for the following overhead costs:
£
Production 20 000
Selling 40 000
Administration 25 000
4. Issues of raw materials were £180 000 to Department A,£192 500 to Department B and £65 000 for
production overhead items.
5 Wages incurred were analyzed to functions as follows:
£
Work in progress – Department A 300 000
Work in progress – Department B 260 000
Production overhead 42 500
Selling overhead 47 500
Administration overhead 25 000
Total 675 000
6. Production overhead absorbed in the period by Department A was £110 000 and by Department B£120 000.
7. The production facilities, when not in use, were patrolled by guards from a security firm and £26 000 was
owing for this service. £39 000 was also owed to a firm of management consultants which advises on
production procedures; invoices for these two services are to be entered into the accounts.
8. The cost of finished goods completed was:
9. Sales on credit were £870 000 and the cost of those sales was £700 000.
10.
11 Cash received from debtors totaled £520 000.
12 Payments to creditors were £150 000.
You are required:
(a) to open the ledger accounts at the commencement of the trading period.
(b) Using integrated accounting, to record the transactions for the three months ended 30 April.
(c) To prepare, in vertical format, for presentation to management,
(i) a profit statement for the period;
(ii) the
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