Accounting 9706 · AS & A Level · Preparation of financial statements
Preparation of financial statements — practice question
Kelang Limited produces one product only. Items are moved from the production department to the sales department with a mark up of 20%. The balances below have been taken from the books of Kelang Limited at 31 December 2015.
(a)[8]
Prepare the manufacturing account covering the year ended 31 December 2015.
(b)[7]
Prepare the income statement for the year ending 31 December 2015.
(c)[3]
Explain why finished goods inventory is not recorded at transfer price in the statement of financial position.
(d)[7]
Recommend whether they should continue to transfer goods at a mark-up or not. Justify your answer by giving two reasons that support your recommendation.
Worked solution & mark scheme
This 25-mark question has a full step-by-step worked solution and mark scheme.