The following details were supplied by G Limited, a manufacturing company, for the year ended 31 March 2024.
Purchases: Raw materials $68000; Finished goods $32413.
Wages: Factory operatives $183700; Factory supervisors $47200.
Administration salaries $34925.
Factory machinery at cost $247000.
Provision for depreciation of factory machinery $51500.
Factory general expenses $20250.
Rates & insurance $7100.
Administration expenses $5470.
Carriage on purchases of finished goods $2180.
Royalties $3240.
Inventory:
1 April 2023 - Raw materials $18200; Work in progress $23400; Finished goods $6820.
31 March 2024 - Raw materials $19820; Work in progress $22650; Finished goods $9350.
Additional information:
1 Factory machinery is to be depreciated at 15% per annum using the reducing balance method.
2 On 31 March 2024 rates, $620, were owing.
3 Rates and insurance are to be apportioned 60% to the factory and 40% to the office.
(a)[10]
Prepare the manufacturing account for the year ended 31 March 2024.
(b)[5]
Prepare the trading section of the income statement of G Limited for the year ended 31 March 2024.
(c)[5]
Advise G Limited whether to employ the consultant to review their credit control policy. Support your answer with two advantages and two disadvantages.
Worked solution & mark scheme
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