Financial Statements of a Manufacturer (Edexcel IGCSE Accounting: Financial Statements): Exam Questions

Exam code: 4AC1

2 hours7 questions

11 marks

Yola, a manufacturer, provided the following information for the year ended 31 March 2023.

	1 April 2022 $	31 March 2023 $
Inventory – raw materials – work in progress – finished goods	12980 12340 20100	19170 11170 37800
Carriage inwards		1610
Carriage outwards		2390
Electricity		15000
Factory rent paid		69800
Insurance		8000
Other payables – factory supervisor		350
Other receivables – factory rent		12400
Production machinery – cost – provision for depreciation		206500 81000
Purchases – raw materials		186500
Revenue		827500
Royalties		12000
Wages paid – production – factory supervisor – administration		95600 37400 21500

Production machinery is depreciated at 20% per annum using the reducing balance method. A full year’s depreciation is charged in the year of purchase.

Electricity and insurance are apportioned 70% to the factory and 30% to administration.

Prepare, for the year ended 31 March 2023, the manufacturing account

Yola

Manufacturing Account for the year ended 31 March 2023

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9 marks

Prepare, for the year ended 31 March 2023, the income statement.

Yola

Income Statement for the year ended 31 March 2023

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3 marks

Explain the difference between the three types of inventories: raw materials, work in progress and finished goods.

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11 marks

Dingle provided the following information for the year ended 31 January 2023.

	1 February 2022 $	31 January 2023 $
Factory machinery – cost – provision for depreciation	89000 40500	128000 To be calculated
Office equipment – cost – provision for depreciation	36000 9000	36000 To be calculated
Inventory – raw materials – work in progress – finished goods	21200 19100 23000	23600 18400 31750

1 February 2022
$

31 January 2023
$

Factory machinery

– cost

– provision for depreciation

89000

40500

128000

To be calculated

Office equipment

– cost

– provision for depreciation

36000

9000

36000

To be calculated

Inventory

– raw materials

– work in progress

– finished goods

21200

19100

23000

23600

18400

31750

	31 January 2023 $
Other payables – factory power	3300
Other receivables – factory supervisor’s wages	830
Factory power paid	38200
General expenses	36000
Insurance	7800
Purchases of raw materials	198045
Rent	46000
Revenue	729595
Royalties	41300
Wages paid – production staff – factory supervisor – administration staff	89700 24000 16590

Rent and insurance are apportioned 80% to the factory and 20% to administration.

General expenses are apportioned 90% to the factory and 10% to administration.

Depreciation is charged on:

factory machinery at 15% per annum using the straight line method
office equipment at 25% per annum using the reducing balance method.

A full year’s depreciation is charged in the year of purchase.

Prepare the manufacturing account for the year ended 31 January 2023.

Dingle

Manufacturing account for the year ended 31 January 2023

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9 marks

Prepare the income statement for the year ended 31 January 2023.

(9)

Dingle

Income statement for the year ended 31 January 2023

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2 marks

Explain why a manufacturer may purchase finished goods.

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6 marks

State, indicating with a tick (✓), where each item will be shown in the financial statements of a manufacturer.

	Manufacturing account		Income statement
	Prime cost	Factory overheads	Income	Expenditure
Wages – production staff
Wages – office staff
Wages – factory supervisor
Carriage outwards
Decrease in provision for irrecoverable debts
Royalties paid

Bella and Chand are in partnership sharing profits and losses equally. They provided the following information at 30 September 2022.

	$
Capital Accounts Bella Chand	50 000 50 000
Capital Accounts Bella Chand	10 500 3 450
Property, plant and equipment Cost Provision for depreciation	65 000 18 050
Provision for irrecoverable debts	380
Bank	4 775
Inventory	38 800
Other payables	430
Petty cash	125
Trade payables	3 490
Trade receivables	27 600

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12 marks

Prepare the statement of financial position at 30 September 2022.

Bella and Chand

Statement of financial position at 30 September 2022

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11 marks

Thomas, a manufacturer, provided the following information for the year ended 31 March 2021 after the preparation of the manufacturing account.

	1 April 2020 $	31 March 2021 $
Office equipment – Cost – Accumulated depreciation	25 000 9 000	25 000 12 200
Plant and machinery – Cost – Accumulated depreciation	200 000 72 000	200 000 97 600
Inventories – Raw materials – Work in progress – Finished goods	20 000 12 000 27 500	25 000 11 000 30 000
Provision for irrecoverable debts	2 500	3 000
Revenue		425 000
Production cost		300 000
Administrative expenses paid		45 000
Carriage outwards		2 745
Office rent paid		24 000
Other payables – office rent		3 000
Other receivables – administrative expenses		5 000
Trade receivables		60 000
Cash in hand		800

Prepare the income statement for the year ended 31 March 2021.

Thomas

Income statement for the year ended 31 March 2021

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9 marks

Prepare an extract of the statement of financial position at 31 March 2021 showing the Assets section only.

Thomas

Statement of financial position at 31 March 2021

Assets

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15 marks

Leo, a manufacturer, provided the following information for the year ended 31 March 2021.

	1 April 2020 $	31 March 2021 $
Premises Cost Accumulated depreciation	500 000 100 000	500 000 To be calculated
Plant and machinery Cost Accumulated depreciation	250 000 90 000	250 000 To be calculated
Inventory Raw materials Work in progress Finished goods	56 000 64 000 108 000	44 000 68 400 112 000
Carriage inwards on raw materials		1 300
Carriage outwards		2 100
Direct wages		82 400
Electricity		18 000
Factory insurance paid		9 000
Indirect factory expenses		79 500
Indirect wages paid		83 650
Other payables – indirect wages		1 350
Other receivables – factory insurance		500
Purchases of raw materials		167 500
Returns inwards		12 000
Returns outwards		17 500
Revenue		630 000
Royalties		15 000

Plant and machinery is depreciated at 20% per annum using the reducing balance method.

Premises are depreciated at 10% per annum using the straight line method.

Both electricity and depreciation on premises are apportioned 75% to the factory.

Prepare the manufacturing account for the year ended 31 March 2021.

Leo

Manufacturing account for the year ended 31 March 2021

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5 marks

Prepare an extract of the income statement for the year ended 31 March 2021 showing the trading section only.

Leo

Income statement for the year ended 31 March 2021

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6 marks

Hyat, a manufacturer, provided the following information for the year ended 31 December 2019.

	1 January $	31 December $
Factory machinery Cost Accumulated depreciation	40 000 14 400	40 000 To be calculated
Inventory Finished goods Work in progress	4 730 1 370	5 180 1 450
Administration expenses	13 475
Wages and salaries Factory indirect Office	15 000 5 000
Rent, rates and power Factory Office	4 500 1 500
Revenue	68 000

1 January $

31 December $

Factory machinery

Cost

Accumulated depreciation

40 000

14 400

40 000

To be calculated

Inventory

Finished goods

Work in progress

4 730

1 370

5 180

1 450

Administration expenses

13 475

Wages and salaries

Factory indirect

Office

15 000

5 000

Rent, rates and power

Factory

Office

4 500

1 500

Revenue

68 000

Factory indirect wages of $250 were owing.
Administration expenses of $1 750 were paid in advance.
Depreciation is charged on factory machinery at 20% per annum using the reducing balance method.

Hyat has already calculated the prime cost as shown.

Complete the manufacturing account for the year ended 31 December 2019.

Hyat

Manufacturing account for the year ended 31 December 2019

Prime cost 18 750

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9 marks

Prepare the income statement for the year ended 31 December 2019.

Hyat

Income statement for the year ended 31 December 2019

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3 marks

Jeff is a manufacturer of motor vehicles.

Define the following terms:

raw materials

work in progress

finished goods.

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11 marks

Jeff provided the following information for the year ended 31 December 2019.

	1 January $	31 December $
Inventory Finished goods Raw materials Work in progress	25 500 18 750 21 570	31 750 16 250 18 590



Factory machinery Cost Provision for depreciation	90 000 43 920	90 000 To be calculated


Carriage inwards		8 955
Insurance		12 500
Heat, light and power		37 250
Purchases of raw materials		238 795
Production wages		98 000
Supervisor wages		28 575
Royalties		50 000

Insurance, heat, light and power are apportioned between the factory and the office in the ratio of 80:20
Heat, light and power paid in advance, $1 750
Production wages for workers owing, $1 250
Supervisor wages owing, $2 325
Depreciation for factory machinery is charged at 20% per annum using the reducing balance method.

Prepare the manufacturing account for the year ended 31 December 2019.

Jeff

Manufacturing account for the year ended 31 December 2019

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5 marks

State, indicating with a tick, (✓), where each item will be shown in the statement of financial position.

	Non-current assets	Current assets	Non-current liabilities	Current liabilities
Accumulated depreciation
Bank loan 2026
Work in progress
Bank overdraft
Other receivables
Provision for irrecoverable debts

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Financial Statements of a Manufacturer (Edexcel IGCSE Accounting: Financial Statements): Exam Questions

The Preparation of Financial Statements

Financial Statements of a Sole Trader

Financial Statements of a Partnership

Incomplete Records

The Calculation & Interpretation of Accounting Ratios

Financial Statements of a Manufacturer