1 Net Sale Total Sales - Sales return - sales discount 2 Cost of goods sold COGS of Trading business COGS of Manufacturing b Inventory (at start) 10,000 1 Direct ma add: Net Purchase 120,000 2 Direct lab Inventory available for sale 130,000 3 Factory o Less: Inventory (at end) (20,000) 4 Work in P 5 Finished COGS 110,000 3 Operating expenses All expenses related to operation of business. It inc (T & M) Office expenses (Called Administrative and Genera Sales expenses (Called Selling and marketing exp 4 Other Income All income which are not related to main business (T & M)
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
1 Net Sale Total Sales - Sales return - sales discount
2 Cost of goods sold
COGS of Trading business COGS of Manufacturing business
Inventory (at start) 10,000 1 Direct material used
add: Net Purchase 120,000 2 Direct labor used
Inventory available for sale 130,000 3 Factory overhead
Less: Inventory (at end) (20,000) 4 Work in Process
5 Finished goods
COGS 110,000
3 Operating expenses All expenses related to operation of business. It includes
(T & M) Office expenses (Called Administrative and General Exp) and
Sales expenses (Called Selling and marketing expenses)
4 Other Income All income which are not related to main business activities
(T & M)
(T & M)
COGS of Manufacturing business
Direct material used
Direct labor used
Factory overhead
Work in Process
Finished goods
All expenses related to operation of business. It includes
Office expenses (Called Administrative and General Exp) and
Sales expenses (Called Selling and marketing expenses)
All income which are not related to main business activities
Particulars Rs. Rs.
1. Direct material used
Raw material (at start)
Add: Net Purchases:
Purchases 210,000
Add: Freight in 4,500
Gross Purchases 214,500
Less: Purchase return 8,000
Purchase discount 4,000 (12,000)
Net Purchases
Total raw material avaiable for use/ consumed
Less: Raw material ( at end)
Raw Material Consumed/ Used:
2. Direct Labour:
Direct labor 60,000
Add: Direct labor payable 4,000
Prime Cost
3. Factory overhead:
Machinery repair
Heat and light
Factory insurance 7,500
Less: Prepaid Insurance (6 months x 625) (3,750)
Indirect labor
Factory supplies 10,000
Less: Factory supplies on hand (3,000)
Depreciation expenses - Factory building
Depreciation expenses - Factory machinery
Total Factory Overhead
Manufacturing Cost / Factory Cost
4. Work in Process:
Name of Company
Cost of Goods Manufactured
For the period ended Dec 31, 1996
Add: Work in process (at start)
Total work in process
Less: Work in process (at end)
Cost of Goods Manufactured
2
3
NET INCOME
Rs. Rs.
56,000
202,500
258,500
(28,000)
230,500
64,000
294,500
8,000
16,500
3,750
9,000
7,000
3,000
5,000
52,250
346,750
Name of Company
Cost of Goods Manufactured
For the period ended Dec 31, 1996
24,000
370,750
(20,000)
350,750
SAAD Manufacturing Co.
Income Statement
1 NET SALES:
Sales
Less: Sales return 4,600
Sales discount 5,000
NET SALES:
2 Less: COST OF GOODS SOLD:
Cost of goods manufactured
Add: Finished Goods (at start)
Total Finished goods available for sale
Less: Finished Goods (at end)
COST OF GOODS SOLD
3 Less: Operating Expenses:
Administrative Expenses:
Other Administrative expenses
Depreciation expenses - Office building
Marketing and Selling Expenses:
Amortization on patent
NET INCOME
508,600
(9,600)
NET SALES: 499,000
350,750
70,000
420,750
(92,000)
COST OF GOODS SOLD (328,750)
GROSS PROFIT 170,250
40,000
6,000 46,000
2,000 2,000 (48,000)
NET INCOME 122,250
Particulars Rs. Rs. Rs.
1. Raw / Direct Material Consumed/ Used:
Raw material (at start) 3,420
Add: Net Purchases:
Purchases 90,563
Add: Freight in 477
Gross Purchases 91,040
Less: Purchase discount
Net Purchases 91,040
Total raw material avaiable for use/ consumed 94,460
Less: Raw material ( at end) (7,130)
Raw Material Consumed/ Used:
2. Direct Labour:
Direct Labour used
Prime Cost
3. Factory overhead:
Indirect labor 5,026
Depreciation - Factory equipment 2,135
Misc. FOH 17,908
Rent (80%) 4,000
Total Factory Overhead
Manufacturing Cost / Factory Cost
4. Work in Process:
Add: Work in process (at start)
Total work in process
Less: Work in process (at end)
Cost of Goods Manufactured
5.Finished Goods:
Add: Finised Goods (at start)
Total Finished Goods available for sale
Less: Finished Goods (at end)
Cost of Goods Sold
30
Net Sales
Less: Cost of goods sold
Less: Operating expenses:
1 Administrative expenses:
Rent (10%)
Office salaries
Misc. admin
Total administative expenses
2 Selling & Marketing expenses:
Rent (10%)
Sales salaries
Royalties paid
Freight out
Misc. marketing expenses
Un-collectable expenses
Total Marketing expenses
Add: Other income:
Interest earned
1 Calculation of nos. of units produced:
Nos. of units sold 4,300
Add: Finished goods (at end) 179
Total finished goods available for sale 4,479
Less: Finished goods (at start) (120)
NOS. OF UNITS PRODUCED 4,359
2 Calculate the unit cost / Average cost / Per unit cost:
Unit cost =
Nos. of units produced
183,078 42
4,359
3 Calculation of Cost of Finished goods:
Cost of finished goods = FG (at end) in units x average rate
Cost of finished goods = 179 units x $42
Cost of finished goods = 7,518
COGM
1
2
3
4
5
Rs.
87,330
62,522
149,852
29,069
178,921
8,159
187,080
(4,002)
183,078
4,584
187,662
(7,518)
180,144
387,000
(180,144)
Gross Profit 206,856
Administrative expenses:
500
Office salaries 24,790
8,700
Total administative expenses 33,990
Selling & Marketing expenses:
500
Sales salaries 28,000
Royalties paid 21,500
1,860
Misc. marketing expenses 11,380
Un-collectable expenses 280
Total Marketing expenses 63,520
Total operating expenses (97,510)
Operating Income 109,346
Interest earned 130
NET INCOME 109,476
Closing Entries of Manufacturing Companies:
1 Manufacturing account
Raw material (at start)
Work in process (at start)
Purchase
Transportation in
Direct labor used
Indirect labor
Depreciation expenses
Rent
Misc
(To close: the manufacturing expenses)
2 Raw material (at end)
Work in process (at end)
Purchase discount
Manufacturing account
(To close: all the manufacturing revenue account)
3 Close the manufacturing account:
Income Summary
Manufacturing account (COGM)
Finished goods (at start)
Rent (10%)
Office salaries
Misc. admin
Rent (10%)
Sales salaries
Royalties paid
Freight out
Misc. marketing expenses
Un-collectable expenses
4 Close the revenue account
Sales
Finished goods (at end)
Interest earned
Income Summary
5 Close the net income or net loss:
a) Incase of net income (When credit side is more)
Income summary
Retained Earning
b) Incase of net loss (When Debit side is more)
Retained earning
Income Summary
194,210
3,420
8,159
90,563
477
62,522
5,026
2,135
4,000
17,908
7,130
4,002
840
11,972
(To close: all the manufacturing revenue account)
284,332
Manufacturing account (COGM) 182,238
4,584
500
24,790
8,700
500
28,000
21,500
1,860
11,380
280
387,000
7,518
130
394,648
a) Incase of net income (When credit side is more)
110,316
110,316
b) Incase of net loss (When Debit side is more)
Debit
Credit
Closing Entries of Manufacturing Companies:
1 Close the manufacturing expenses account:
Manufacturing account Debit
Raw material (at start) Credit
Work in process (at start) Credit
Purchase Credit
Transportation in Credit
Direct labor used Credit
All Factory overhead Credit
2 Close all the manufacturing revenue account:
Raw material (at end) Debit
Work in process (at end) Debit
Purchase return Debit
Purchase discount Debit
Manufacturing account Credit
3 Close the manufacturing account:
Income Summary Debit
Manufacturing account (COGS) Credit
Finished goods (at start) Credit
Sales return Credit
Sales discount Credit
All types of operating expenses Credit
4 Close the revenue account
Sales Debit
Finished goods (at end) Debit
All types of other income Debit
Income Summary Credit
5 Close the net income or net loss:
a) Incase of net income (When credit side is more)
Income summary Debit
Retained Earning Credit
b) Incase of net loss (When Debit side is more)
Retained earning Debit
Income Summary Credit
Solution of Q9
Particulars Rs. Rs. Rs.
1. Raw / Direct Material Consumed/ Used:
Raw material (at start) 30,000
Add: Net Purchases:
Purchases 68,000
Add: Purchase discount lost 8,000
Gross Purchases 76,000
Net Purchases 76,000
Total raw material avaiable for use/ consumed 106,000
Less: Raw material ( at end) (36,000)
Raw Material Consumed/ Used:
2. Direct Labour:
Direct Labour used
Prime Cost
3. Factory overhead:
a) Fuel consumed:
Fuel (at start) 3,000
Add: Fuel purchase during the year 5,000
Total fuel available for use 8,000
Less: Fuel (at end) (3,400) 4,600
b) Factory repair parts consumed:
Fatory parts (at start) 4,500
Add: Factory parts purchased during the year 4,200
Total parts available for use 8,700
Less: Factory parts (at end) (2,600) 6,100
Misc. Factory overhead 2,300
Depreciation on plant 3,000
Superintendance 2,000
Indirect factory labor 4,000
Total Factory Overhead
Name of Company
Cost of Goods Sold
For the period ended June 30, 2002
Manufacturing Cost / Factory Cost
4. Work in Process:
Add: Work in process (at start)
Total work in process
Less: Work in process (at end)
Cost of Goods Manufactured
5.Finished Goods:
Add: Finised Goods (at start)
Total Finished Goods available for sale
Less: Finished Goods (at end)
Cost of Goods Sold
Conversion cost = Direct labor + Factory overhead
Conversion cost:
Direct Labor 93,100
add: Factory overhead 22,000
Conversion cost 115,100
Factory overhead rate:
FOH rate = Total Amount of FOH
Total amount of Direct Labor
22,000 x 100
93,100
FOH rate = 23.63 %
Rs.
70,000
93,100
163,100
22,000
Name of Company
Cost of Goods Sold
For the period ended June 30, 2002
185,100
20,000
205,100
(15,000)
190,100
24,000
214,100
(12,000)
202,100
x 100
Particulars Rs. Rs. Rs. Rs.
1. Raw / Direct Material Consumed/ Used:
Raw material (at start) 110,000
Add: Net Purchases:
Purchases 500,000
Add: Transportation in 10,000
Gross Purchases 510,000
Less: Purchase return 12,000
Purchase discount 18,000 (30,000)
Net Purchases 480,000
Total raw material avaiable for use/ consumed 590,000
Less: Raw material ( at end) (40,000)
Raw Material Consumed/ Used: 550,000
2. Direct Labour:
Direct Labour used 350,000
Prime Cost 900,000
3. Factory overhead:
Indirect material 100,000
Indirect labour 50,000
other factory expenses 150,000
Total Factory Overhead 300,000
Manufacturing Cost / Factory Cost 1,200,000
4. Work in Process:
Add: Work in process (at start) 50,000
Total work in process 1,250,000
Less: Work in process (at end) (90,000)
Cost of Goods Manufactured 1,160,000
5.Finished Goods:
Add: Finised Goods (at start) 60,000
Total Finished Goods available for sale 1,220,000
Less: Finished Goods (at end) (20,000)
Cost of Goods Sold 1,200,000
Name of Company
Cost of Goods Sold
For the period ended June 30, 2002
Required no.1: Manufacturing Cost
Particulars Rs. Rs. Rs.
1. Raw / Direct Material Consumed/ Used:
Raw material (at start) 176,000
Add: Net Purchases:
Purchases 2,400,000
Add: Transportation in 32,000
Net Purchases 2,432,000
Total raw material avaiable for use/ consumed 2,608,000
Less: Raw material ( at end) (196,000)
Raw Material Consumed/ Used:
2. Direct Labour:
Direct Labour used
Prime Cost
3. Factory overhead:
Total Factory Overhead
Manufacturing Cost / Factory Cost
Required no. 2: Cost of Goods Manufactured:
Manufacturing Cost / Factory Cost
4. Work in Process:
Add: Work in process (at start)
Total work in process
Less: Work in process (at end)
Cost of Goods Manufactured
Requried no.3: Cost of Goods Sold
Cost of Goods Manufactured
ABC Company
5.Finished Goods:
Add: Finised Goods (at start)
Total Finished Goods available for sale
Less: Finished Goods (at end)
Cost of Goods Sold
Rs.
2,412,000
3,204,000
5,616,000
1,885,600
7,501,600
7,501,600
129,800
7,631,400
(136,800)
7,494,600
7,494,600
ABC Company
620,000
8,114,600
(467,400)
7,647,200
Required 1:
1. Direct material used: 430,000
2. Direct labor used: 250,000
Prime Cost 680,000
3. Factoy overehead
Heat, light and power 150,000
Indirect labor 25,000
Depreciation exp 40,000 Repiar expenses 15,000 230,000
Manufacturing Cost 910,000
4. Work in process:add: WIP - at start 28,000
Total WIP 938,000
less: WIP - at end (37,000)
Cost of Goods manufactured 901,000
Required 2:Per unit cost = 901,000 22.53
40,000
Required 3:Finished Goods - at end (units and cost)
Units
Finished goods - at start 1,000 Produced during the period 40,000
Total FG available for sale 41,000 Less: Sold units (40,500)
Finished goods - at end 500
Cost of finished goods - at end = FG units x Rate
Cost of finished goods - at end = 500 units x Rs 22.53Cost of finished goods - at end = 11,265
Required 4:
1. Net Sales:
Gross Sales 1,000,000
Less: Sales return (40,000) Less: Sales discount (10,000)
NET SALES 950,000
2. Cost of Goods Sold:
Cost of goods manufactured 901,000 Add: Finished goods - at start 25,000
Cost of Goods manufactured
Nos. of units produced
Income Statement
Total Finished goods available for sale 926,000 Less: Finished goods - at end (11,265)
COST OF GOODS SOLD (914,735)
Gross Profit 35,265
1 Applied Factory overhead (30% x $ 290,000) 87,000
2 Actual Factory overhead
a. Indirect labor 46,000
b. Light and power 4,260
c. Depreciation 4,700
d. Repairs 5,800 e. Misc FOH 29,000 89,760
Under Applied FOH 2,760
Related Documents
