}ESTION “i The Blue Dragon Knitting Factory Ltd, Manufacturing Account for the year ending 31 March 1990 Stock of raw materials 1 April 1989 add raw materials purchased tess closing stock raw materials w materials issued to production Io direct factory wages and overtime(1 500 000 + 118 000) oyalties Prime cost 4d_factory overhead 3 ‘ages and salaries (5000000 @0.8) 4 000 000 actory rates and insurance 28 000 24 000 (40 090 - 25 000) actory power (475 000 +.18 000) 493 000 epairs and maintenance machinery 29 000 vorociation iané and buildings 170 000 factory machinery 110 000 actory cost 4d: work-in-progress at 1 April 1989 28s: work-in-progress at 31 March 1990 id 20% factory on cost Cost of goods transferred to sales department Fapee a 112 000 4 355 000 4 467 000 125 000 4 342 000 1 618 000 350000 6 510 000 4 830-000 Ti 340 000 19 000 “TT 359 000 24 000 TT 335 000 2 267 000 13 602 000 Marks, wee wee ae ate (fo LQUESTION 1 (Cont'd) The Blue Dragon Knitting Factory Ltd., Profit and loss account for the year ended 31 March 1990 s $ Sales 17 500 000 % Less cost of sales opening stock finished goods 96 000 5 Add cost of goods transferred 13 602 000 ‘ 13 698-000 Less closing stock finished goods 108 000 13 $90 000 5 Gross profit 3910 000 Less expenses Wages and salaries ( 5.000 000 @0.2) 1 000 000 * Office and godown rent 1 200 000 5 Postage and stationery 6 000 ‘ Motor”Expenses 25 000 % Interest on loan 100 000 1 Depreciation vehicles 42 000 2373 000 1 ze profit sales department 1 537 000 Add factory profit 2 267 000 1 Adjustment for unrealised profit (2 000) L Net profit before tax 3 802 000 Taxation provided 525 000 5 Net profit tax 3.277 000 Balance brought forward form P/C App A/C 2 261 000 ® 5-538 000 Dividend proppsed 2 000 000 & (98) Balance carried forward 3.538 000Marks (cont'd.) The Blue Dragon knitting Factory Ltd/. Balance sheet as at 31 March 1990 ‘ Fixed assets Cost Accumulated Book SS Depreciation Value s 5 $ Land and buildings 8 500 000 408 000 8 092 000 Factory machinery 875, 000 435.000 440 000 Motor vehicles 232 000 232 000 0 & 532 000 Current sasets Stock = rav materials 125 000 5 = work-in-progress 24 000 y = finished goods 108 000 Less provision for unearned profit 18 000 90 000 L Debtors 1 175 000 x Bills receivable 1 395 000 § Prepayments 12 000 4 Rank and cash 26 000 g B47 000 Less current liabilities Trade creditors 130 000 4 Accruals - interest 50 000 % = wages 118 000 ‘ = electricity 18 000 % Provision for tax 525 000 4 proposed dividend 2000 000 & — 2 841 000 Working capital 6 000 Net assets 3 538-000 Represented by Shareholders funds ‘Authorised capital : 100 000 shares of $100 each 19 000 000 * Issued and paid up capital 40 000 shares of $100 each fully paid 4 000 000 5 Profit and loss appropriation 3.538 000 5 ‘Total shareholders funds 7 538 000 Long term liabilities 10% loan due 30/6/91 1 900 000 *aD ‘8-538 000 Note 1 As the motor vehicles will be depreciated to zero, a token amount up to $2000 may left in as book value and the depreciation changed in the profit and loss account accordingly. Total : 30