~ • F Chapte 8B

inane· I - :r ; -----------
final Acco unt ta 8tatements -
s of .Manufacturing Entit ies
Manufacturing
. Account
M FORMAT OF M
------;;=~~a~n~ui~a~ctu~rii1nn A ANUFACTURING ACCOUNT
Particulars ~ ccount of
•"·" ••• for the viear ended ...........
Materials Consumed: t ~
0 Particulars
opening Stock of Raw Materials By Net Factory Cost of production,
dd: Purchases of Raw Materials transferred to Trading A/c (bal. fig)
A
Sub-Total
By NRV / Sale Value of By-Products, if any.
Less:
Closing Stock of Raw Materials
Net balance =Materials Consu ed
Direct Manufacturing Wages m
T0
T0
Direct Expenses, if any
Sub-Total Prime Cost
T0
Production Overheads
SulrTotal Gross Factory Cost
Add: Opening Stock of WIP
ess:
L Closing Stock of WIP
~

Total
~

Tradin9 Account is prepared as under in this case . Total

T •
p RADING ACCOUNT OF ......... FOR THE YEAR ENDED
rticulars ;,: "· "· "·
, Particulars
To Opening Stock of Finished Goods
By Sales
To Manufacturing Account, i.e. Cost of Production
By Closing Stock of Finished Goods
To Gross Profit c/d to P&L Account
Total
Total

Signific ance of Manufacturing Accoun t

1. Meaning:
(a) The Manufacturing Account shows the total cost of manufacturing the finished products, with appropriate details
and classifications of Cost.
(b) The debits to this account consist of the Cost of Materials Consumed, Manufacturing Wages and Expenses incurred
directly or indirectly on manufacture.
(c) This Account is relevant only for Manufacturing Entities, and is not applicable for Trading Entities.

2. Purposes:
(a) This Account provides details of Factory Cost and facilitates reconciliation of Financial Books with Cost Records.
(b) It also serves as a basis of comparison of manufacturing operations from year to year.
(c) Separate Columns provided for Quantity and Values, will enable the entity to ascertain the cost of production
per
unit of the product.
(d) It may be useful to have a column for percentage in the Manufacturing A/c showing the cost of each item as
a
percentage of the total. .
(e) Wh h t . rried to the Trading Afc at above cost, e.g. market pnces, the Manufacturing Account
. ere t e outpu 15 ca ss on manufacture, which is transferr~ to P&L A/c. This will be used to fix the amount of
disclose~ the Profit or Lo . bonus when such schemes are in force. [Note: In such cases, there is a necessity
production or profit sharmg ds not yet sold, by creating Stock Reserve.]
to reverse the unrealised profit on goo

8B.1
 J •

Padhuka's Practical Leaming Series Accounting - For CA Foundation ,..

'/, ,,/
' ;t"1; •

· A
ii*

Items in Manufacturing ccount

Item .

1. Materials
Explanation
Cost of Raw Materials Consumed during the period =
Opening Stock of Raw Materials
.
Treatment

Debit in Mfring Account

---
--
Consumed Add: Purchases of Raw Materials
Less: Closing Stock of Raw Materials
Wages paid to workers engaged in production process, (i.e. in Factory Debit in Mfring Account
2. Direct Wages

3. Direct
Departments) is debited to the Manufacturing Account.
• Direct Manufacturing Expenses are costs, other tha~ Materials and
Wages, which are incurred for a specific product / service. Debit in Mfring Account
--
Expenses • Examples: (a) Royalty for use of licence/ technology, (b) Hire Charges

4. Prime Cost Prime

of Plant/ Equipment, if based on units produced. ,
Cost (or Direct Cost)= Raw Materials Consumed+ Direct Wages+ Sub-Total in Dr. Side.
-
Direct Expenses. ,,

• These are called Factory Overheads / Production overheads / Works -

5. Indirect Overheads / Manufacturing Overheads, etc.
Manufac- • It is the total Indirect Costs (Indirect Materials + Indirect Labour + Debit in Mfring Account
turing Indirect Expenses) which cannot be lir:tked directly to units produced.
Expenses • Examples: Factory Rent, Rates & Insurance, Depreciation on
Machinery, Supervisor's Salary, Consumables like Oils, Lubricants, etc•
I .
• By-Product is an incidental product, arising during the production
-
6. By-Product operations, having some saleable value.
Revenues Credit in Mfring Account
• Examples: Molasses is the by-product in sugar manufacturing.
• Net Realizable Value of By-Product is credited to Manufacturing Ne .
It is the Net Cost of Production as shown by Manufacturing Ne, and is
computed as under - ••
Prime Cost (as per 4 above)
Balancing Figure in
7. Factory Cost Add: Production Overheads (as per 5 above) Manufacturing Account,
Add: Opening Stock of Work-in-Progress
and is transferred to
Less: Closing Stock of Work-in-Progress Trading Account.
Less: NRV of By-Products, if any. -
Net Factory Cost
•.
' ..

8B.2
 .,.------------
- - - - - - - - - -_ _fF~in~an~c
--
~ia~l~S~ta~te~m~e~n~ts~fFi~n~al~A~c~co~u~n~ts~
of~M~an~u~f~act~ur~in~glE~n~t:!!it~ies~

Pr ac tic al Ill us tra tio ns

. oo 000 units were produced In
1• 1 ~ to pay roy alty a factory P
@' 3 per unit to th ·J er unit mat
/ '- 89 8 apa erial cost wa s, 10 and per unit
labour cost wa st 5. Also, •
noso collaborator who supplied tech
nology. Calculate Manufacturingit was
tt,is case Ma nuf act urin g Cos Cost.
111 t comprises of_
~
~
Raw Material consumed
1,00,000 X 10 10, 00, 000
Direct Wages
1,00,000 X 5 5,0 0,0 00
~ Direct Expenses
Tot al 1,00,000 X 3 3,0 ,00 0
L.- --"
18, 00, 000
,.. following are the Manufacturing
6o ,nlsSing from these accounts. Ale
'
cre d',tor
s Ale and Trading Ale provided
~ Particulars
•
by Ms. Shivi. There are certain
figures
To Opening Stock Ale Raw Material Ale
Amount Date
To Creditors Ale 1,00,000 Particulars Amount
., By Raw Material Consumed 0
'-"" By Closing Stock Ale t
'-
Particulars Creditors Ale
To Bank Ale Amount Date Particulars Amount
To Balance c/d 22,00,000 By Balance b/d 15,00,000
6,00,000
'--
Manufacturing Ale \r"i· · _:_
~ -., , ,. . ,.
Particulars
Amount Particulars
Raw Material Co ns um e\. \,~ Am oun t
Wages \~ By Trading Ale
3,50,000 17,9 4,000
Q.Deprtciation
Direct Expenses 2,00,000
2,44,000
Purchase of Machinery worth f 10,0
0,000 has been omitted. Machine
Wages Include the following Paid ry are chargeable at a depreciatio
to Fac tory Wo n rate of 10%.
rke rs-~ 3,00,000, Paid to Labour at off ice -~ 50
Direct Expenses include following: . 000
(a)
, 20,000, (c) Freight Inwards off 35,0 Electricity charges off 80,000 of which 30% pertained to offi '
ce, (b) Fuel Charges of
00, (d) Delivery charges to custom
are required to prepare revised Man ers - ~ 20,000.
ufacturing Ale, and Raw Material
Ale. _ ___ __

1. Working Notes
Particulars .
1. _Depreciation Omitted (Purchase of Co mp uta tion
Mac hinery 10,00,000 has been omitted t
2. Wages pertaining to office ) 10, 00, 000 X 100/o 1,0 0,0 00
and will be charged P&L Ne
3. Office Electricity Charges & Deliver 50, 000
y Charges excluded from Direct
4. Decrease in Dire Expense 80, 000 X 300/o + 20, 000
ct Expenses 44, 000
Note: Fuel charges are related to 50, 000 + 44, 000 94, 000
Factory Expenses and also freight
Godown so they are par t of Dire inwards are incurred for bringing
ct Expenses. goods to Factory /

2. Manufacturing A/ c
Par ticu lars Amount Par ticu lars
To Raw Material Consumed • 10,00,000 Am oun t
Bal. Fig By Trading Ne
To Wages 3,50,000 - 50,000 , 3,00,000 Given balance
To Depreciation 17, 94, 000
2,0 0,0 00+ 1,00,000 3,00,000 Add: Addi Depreciation
lo Direct Expenses 1,0 0,0 00
2 I 44I 000 - 44,000 2,00,000 Less: Deer. in Direct Exp
(94 ,00 0)
1s,oo,ooo 18, 00, 000
18, 00, 000
88. 3
 . - For CA foundatio, ..n_____
Padhuka's Practical Leaming Series -Acco,uu1nr,tl1n!9L:,_:::_~--
11

Raw Material A/c Amount

3• particulars ~
d - from Manufacturing A/c 10,00,000
Particulars Amount
By Raw Material consume . 4,oo,o00

---
To Opening Stock Ne 1,00,000 :-:---
By Closing Stock Ne (Bal. Fig) 14,oo,000
To Creditors Ne (W.N.4) 13,00,000
14,00,000

4, Creditors AI c
Amount
particulars
II Particulars Amount 15,00,00Q ,.
To Bank Ne 22,00,000 By Balance b/d 13,oo,ooo
By Raw Materials Ne (Bal. figure)
To Balance c/d 6,00,000 28,00,ooo
Total 28,00,000
Total -
l'ty
1
The following details were obtained about his
3. Mr. Pankaj runs a factory which produces motor spares of export qua •
manufacturing expenses for the year - •'
...... c.,,
.. 2,10,000
..
WlP. Opening 3,90,000, vwages Direct

5,07,000 {I., Indirect U"-'1~f) 48,000

Closing
on production 1,30,000
Raw Materials Purchases 12,10,000 Direct Expenses Royalty
I/ Repairs & maintenance 2,30,000
Opening 3,02,000
_,• ". Depreciation on Factory Shed 40,000
- Closing ) I l/ 3,10,000
18,000 Depreciation on Plant 60,000
Returned ,i,..,i>
Indirect material \t,l\c,J\ 16,000 By-product at selling price 20,000
{ /,✓
......,,,. , (c) .
'- I
You are required to prepare Manufacturing Account of Mr. Pankaj for the year.

In the Books of Mr. Pankaj Manufacturing Account for the year ended on March 31
Particulars Amount Particulars Amount
To Opening W.I.P. 3,90,000 /BY Closing W.I.P. 5,07,000.. /
To Raw Material Consumed: By By-Products 20,000,
I/
Opening inventory 3,02,000 By Trading Ne - 17,81,000
Purchases 12,10,000 ,v Cost of finished Goods
transferred
Less: Return I/
(18,000) •
(3,10,000)' 11,84,000 .v
Less: Closing inventory '/

To Direct Wages 2,10,000 V

To Direct expenses: Royalty 1,30,000 V
To Manufacturing Overhead

~
Indirect Material 16,000
Indirect Wages 48,000'
Repairs & Maintenance 2,30,000 I/
Depreciation on
Factory Shed J
40,000 1./
Depreciation on Plant & Machinery 60,000 I I/ 3,94,000
Total
' 23,08,000 Total 23,08,000

8B.4
 On March 31, the Trial Balan Financial Statements - Final Accounts of Manufacturing Entities
• ce of Mr Whi
Particulars • te were as follows:
• opening 5t0ck
•RaW Materials
--=-, r---P-a-rti-cu-la-rs_ __,.._ __;:._ _____::...,__:--,:-,
.,
Work in Progress 21,000
Sundry Creditors 15,000
finished goods 9,500 BIiis Payable
sundry Debtors" 7,500
15,500 Sale of Scrap
carriage on Purchases 2,500
24,000 Commission
Received 450
sills Receivable 1,500 Provision for doubtful debts
1,650
wages4 15,000 Capital Account 1,00,000
5alarieS • 13,000 Sales 1,67,200
Telephone, Postage etc. 10,000 Bank Overdraft 8,500
Repairs to Office Furniture 1,000
cash at Bank . 350
Office Furniture, 17,000
Repairs to Plant t~. tt.,,) 101oeo
purchases 1,1oo
1ant and Machinery-t_M.~ ) 85,000
Rent • 7~_,obo
Ughtingt( M . {!Of) 6,000
neral Expenses 1,350
Total 1,500
3,02,800 Total' 3,02,800
The following additional information is available:
1. Stocks on March 31 were- Raw Materials {16,200, Finished goods {18100 Semi-finished goods~ 7,800.
2. . Salari_es an~ wages unpaid for March 2020 were respectively, t 900 an~ t 2:000.
3. Machinery 1s to be depreciated by 10% and office furniture by 71/2%.
.4. ProvisionJor doubtful debts is to be maintained@ 1% of sales.~
5. . Office premises occupy 1/4 of total area.
•\ 6. Lighting is to be charged as to 213 to factory and 1/3 to office. "·
. ·,., 'v

'· • _Prepare the Manufacturing Ale Trading Ale, Profit and Loss~c and the Balance Sheet relating to March 31. ~ - - ~ - - -

In the books of Mr. White Manufacturing Account for the year ended 31st March, 2020
\
Particulars
' Particulars
'
•,I

To Raw material consumed By Closing Stock of Work in Progress 7,800 I/ I

Opening Stock 21,000 •ll By Sale of Scrap 2,500

Add: Purchases 85,000. ~ By Cost of goods Manufactured
•Less: Closing Stock 16,200 l/ 89,800 (Transferred to Trading Account) 1,19,000
To Opening Stock of WIP 9,500
To Wages 13,000 V
[/1
Add: Outstanding Wages 2,000 15,000
~
1,500"
To Carriage on Purchases
1,100 1l/
To Repairs to Plant
4,500 /
To Rent (3/4)
900 V' 1

To Lighting (2/3) 7,000 C~

lo Depreciation of Plant 1,29,300 Total 1,29,300

-- Total -
88.5
 ~Pa~d~h~uk~a~'s~P~ra~ct~ica~IL~e~a~rn~in~g_§S
~er~ie~s.=-~A~cc~o~un~ti~ngt:_~Fo~r_
sCA~Fo~u~nd~a~ti~on!__---~------------
Trading Account for the year en ded March 31
Particulars Particulars
f
To Opening Stock of finished goods
15,500, (l3y Sales ~
1,67,200'
To Cost of goods- from Manufacturing
Afc 1,19,000 By Closing Stock l8,100
To Gross Profit c/d
50,800
Total Total =--
,300-
----
1,85,300 1,85

Profiat and Loss Account for the year ended 31st March, 2020
Particulars Particulars
t
To Salaries
Add: Outstanding
To Telephone & Postage
10,000\,,~
900 l
1
By Gross Profit b/d
10,900 By Commission
---
so,soo
450,1
~

1,000\,/
To Repairs to Furniture
350,..I'
To Depreciation of furniture
To Rent (1/4)
750 • n 4
.. "
•J
1,500, ~
To Lighting (1/3) • I
.,
450 .. ! .
.• ,:~ . I •
To General Expenses
To Provision for doubtful Debts
1,500 v1
To Net Profit
Note 22 ~ ' , , :'
~
,,. '

34,778
Total
51,250 Total
Note: Required Provision 1% of tl,67,200 51,250
= 1,672 Less Existing Provision 1,650
= 22
·--

Balance Sheet as on March 31

capital and Liabilities
t Assets
Capital Account t
1,00,000 V' Plant & Machinery 70,000--V'
Add: Net Profit
34,778 1,34,778 Less: Depreciation
Bank Loan 7,000 /' 63,000
8,500" .-1office Furniture
Sundry 0-editors 10,000--'
15,000 •~Less: Depreciation
Bills Payable 750 9,250,
7,500" 'closing Stock
Salary Payable
900.I~aw Materials
Wages Payable 16,200
2,000 •liNork in Progress
7,800
Finished Goods
18,100
Sundry, Debtors
24,000 /i
Less: ,Provision for Bad Debts
Bills Receivable
1,672 n
15,000 ~V
Total
Cash at Bank 17,000 I
1,68,678 Total 1,68,678
5. The following is the trial balance of Mr. Pand
it for the year ended March 31:
Particulars
f Particulars
Opening Stock Raw Materials f
1,50,000 Sundry Creditors
Finished goods 50,000
75;000 Purchase Returns
Purchase of Raw Materials 5,000
5,00;000 Capital
Land & Building 1,00,000
1,00,000 Bills Payable
Loose tools 24,000
30,000 Long-Term Loan
2,00,000

88.6
 Particulars Financial Statements - Final Accounts of Manufacturing Entities

p1ant &Machinery
Particulars
_1,.~estments 30,000 Provision for Bad and Doubtful Debts 2,000
cash in Hand •• 25,000 Sales 8,50,000
cash at Bank •• 20,000 Bank Overdraft 23,000
furniture &Fixtures 5,000
sills Receivable 15,000
sundry Debtors 15,000
orawfngs 40,000 ·,
20,000 ...
581anes
coal and Fuel 20,000
f acto,Y rent & rates • 15,000 ,
a,nera1Expenses 20,000
AdVertisement 4,000
5,000 ..
sales Return
10,000
sad Debts
otrect Wages (Factory) 4,000
80,000
,ower 30,000
interest Paid 7,000
DisCOunt Allowed 3,000
age Inwards
... - 15,000
~age Outwards 7,000
eommlssion., Paid 5,000
Dividend Paid , 4,000
12,54,000 12,54,000
." Mditional lnfonnation: Stock of finished goods at the end of the yea; ~ 1,00,000.
~ - I ~ ,© 4\ct. lw-\c..\.- ~ ~ qs,s-l~ ~~ (i) f~•J
•
f,\ftl •~ r,.J,-- , ~ 6'f~
l!I . Manufacturing Account of Mr. Pandit for the year ended March 31 - ~
Particulars f
., Particulars f
/,
To Opening Stock of Raw Materials 1,50,000... By Cost of Manufactured
,,,, 8,08,000
5,00,000" goods transferred to Trading A/c
To Purchase l/
Less: Purchase Return 5,000 4,95,000 (l,Altj)
l,..-1
15,000
To carriage Inwards
80,000 y
To Direct Wages
30,000"l/
To Power 15,000 •
y
..
To Coal and fuel . 20,000 •/I
To Factory Rent and Rates 3,ooo, /
To Depreciation on Machinery 8,08,000
s,os,ooo

r Pandit for the year ended March 31

Trading Account Of M • f •
Particulars
Particulars 8,50,00
75,000
10,00
To Opening Stock of finished goods 8,08,000 Less: Sales Return
lo Cost of goods- Trf from ManufactUring Ne 57,000 By Closing Stock
9,40,000
To Gross Profit c/d 9,40,000

8B.7
 • . F CA Foundation
Padhuka's Practical Leaming Series - Accounting -
d d March 31
f the year en e
Profit and Loss Account or particulars
Particulars
t ~
7,000 ,vSy Gross Profit b/~ . 57,ooo
To carnage Outward 3 000 .~y Accrued Comm1ss1on 12,soo,
To Discount Allowed s:ooD'-1-tBy Accrued Interest 1s,000
To Commission Paid
4,000~v
To Dividend Paid
4,000 11 I
To General Expenses I;'
To Advertisement s,ooo ..
V'
To Salaries 20,000'
Add: Outstanding 2,000 i,, 22,000
To Interest Paid 7,000 I l/
Less: Prepaid (1,500) 4 5,500
To provision for Bad & Doubtful Debts 2,000
Add: Bad Debts 4I 000•~
Less: Old Provision for Doubtful Debts (2,000) 4,000
To Depreciation on Building 1,000
To Net Profit c/d 24,000
84,500
• I 84,500

Balance Sheet as on March 31

capital & Liabilities ~ Assets ~

Capital 1,00,000c,ih Plant & Machinery 30,000 i.,-,

I

Add: Net Profit 24,000 Less: Depreciation (3,000) 27,000

Less: Drawings (20,000)' i,., 1,04,000 Land & Building 1,00,000 •~
l-1. . -
Bills Payable 24,000· Less: Depreciation (1,000) 99,000
Sundry Creditors 50,000 1 h=umiture & Fixtures 15,000
.. ....
, ,Salary .Outstanpi!lg "'I r.:i ·, ~
~ "'

l:Ong-Term Loans
.. ., ' ~ ~
'
·\' ; j {/', C, ,''' ,, ~ t,.099!
,•
"'!~v~men~ ,-., ,, ., .. ..,
. • ' •' 2,00,000 I ~closing Stock ,!'.
• J , ,._
""=·•·, --~·
·-·~• ....
~

_,J_j't
,-
,,
'
. ,
l t•[..,'\
•
25,000,
1,00,000'
Bank Overdraft 23,000• 1.oose Tools 30,000 Iv
Sundry Debtors 40,000 ..,,,.,
.... Le,s: Provision for Bad Debts (2,000) 38,000
Bills Receivable 15,000 v
I ·'•
1 . • Accrued Commission 12,500 •V
. . .~ J ; ~. i
' 0
Accrued Interest 15,000 V
Prepaid Interest 1,500,II
'-..
Cash in Hand 20,000 V
·-..
Cash at Bank 5,000 I/
Tot.al 4,03,000 , Tot.al 4,03,000

6. Ram Company is a metal and wood cutting manufacturer, selling products to home construction market. Consider the
following data for the year ending 31 st March.
-- -
Particulars f Particulars t
Sandpaper 5,000 Plant Leasing Costs 1,35,000
Material Handling Costs 1,75,000 Depreciation - Plant Equipment 90,000
Lubricants and Coolants 12,500 Property Taxes on Plant Equipment 10,000
• Misc. Indirect Manufacturing Labour 1,00,000 Fire Insurance on Plant Equipment 7,500
.. Direct Manfacturing Labour 7,50,000 ,Direct Materials Purchased 11,50,000
Direct Materials, 1st April 1,00,000 Sales Revenues 34,00,000
st
Direct Materials, 31 March 1,25,000 Marketing Promotions 1,50,000
Finished Goods, 1st April 2,50,000 Office Salaries 2,50,000
·- - ~- · - - - - - 1._.....
- '

8B.8
 Particulars Financial Statements - Final Accounts of Manufacturing Entities
finished Goods, 31 '' March , Particulars
work•ln•Process, 1st April
work•ln-Process, 31 11 March
3,75,000 Distribution Costs
25,000 Customer Service Costs
1,75,000 '
2,50,000
,repare Manufacturing Account T . 35,000
rad 9 nd

--
' '" a Profit & Loss Account from the above data.
l)r,
Particulars
.
1 M
anufactu •
rang Account for the year ended 31st March Cr.
roMaterials Consumed:

(+)
opening Stock of Raw Materials
Purchases of Raw Materials 1,00,000 I ~
' Particulars
By Net Factory Cost of production,
Transferred to Trading Ne (b/f) 24,00,000
'
Sut}-Total 11,50,000 ~
(-) aosing Stock of Raw Materials 12,50,000
Materials Consum~d (1,25,000) ,~ 1,

To Direct Manufacturing Labour 11,25,000

.
7,50,000 V' I
Prime cost
To Factory Overheads (WN below) 18,75,000
. 5,35,000 ~'rf'
Gross Factory Cost I
(+) Opening Stock of WIP 24,10,000
25,000 /
24,35,000 .....,
(-) Closing Stock of WIP
- Total (35,000)' V.
- 24,00,000 Total 24,00,000

Dr,
2. Trading Account for the year ended 31st March Cr.
Particulars
f Particulars
To Opening Stock of Finished Goods
2,50,000 By Sales 34,00,000
To Factory Cost of Prodn - tfr
24,00,000, By Closing Stock of Finished Goods ... 3,75,000
To Gross Profit (balancing figure) 11,25,000 '
Total 37,75,000\ Total 37,75,000
Dr, 3, Profit and Loss Account for the year ended 31 st March Cr.
Particulars f
, ,r Particulars
To Office Salaries 2,50,000 y Gross Profit b/d 11,25,000
To Marketing Promotion 1,50,000
To Distribution Costs 1,75,000
To Customer Service Costs 2,50,000
To Net Profit (balancing figure) 3,00,000
Total 11,25,000 Total 11,25,000

4, Schedule of Indirect Manufacturing Expenses / Production Overheads / Factory Overhead

s
Particulars
Sandpaper
Material Handling Costs
Lubricants and Coolants
Misc. Indirect Manufacturing Labour 1,00,000
Plant Leasing Cost 1,35,000. .
,

Depreciation - Plant Equipment 90,000

Property Tax - Plant Equipment 10,000
Fire Insurance - Plant Equipment
Total factory overheads 5,35,000

J I
8B.9
 . . r g _ For CA Foundation • spect of his manufactu •
Padhuka's Practical Learning Series - Accoun in re available '" re nng
t Following details we
7. Mr. Shyamal runs a factory, which produces detergen s. ~ - - - - - , - - - - - - - - - - - : : - - t
activities for the year. ~----r-- 26-:000-

✓ ... Opening work-in-progress (9000 units)

48,000
Closing work-in-progress (14,000 units) 2,so,000
j 1
Opening inventory for Raw Materials 3,20,000
8,20,000
Closing inventory of Raw Materials
Purchases
Hire charges of Machinery@t 0.70 per unit manufactured 2,60,000
Hire charges of factory
Direct wages-contracted @t 0.80 per unit manufactured
..,
and @~ 0.40 per unit of closing W.1.P 1,80,000
Repairs and Maintenance
Units produced-5,00,000 units
!Required a Manufacturing Account of Mr. Shyamal for the year''>
st
1. Manufacturing Account for th,!_.year ended 31 March
Particulars ~
Particulars f
By Net Factory cost of production,
To Materials Consumed:
/I Transferred to Trading A/c (b/f) 19,33,600
Opening Stock of Raw Materials 2,60,000~
(+) Purchases of Raw Materials 8,20,000,vf
SutrTotal 10,80,000
(-) Closing Stock of Raw Materials (3,20,000) V
Materials Consumed 7,60,000
To Direct Wages 4,05,600 •V
(5,00,000 X 0.8+ 14,000 X 0.4) ' I..

Prime Cost 11,65,600

''To Factory Overheads (WN below) 7,90,000 1~
Gross Factory Cost 19,55,600
(+) Opening Stock of WIP 26,000 V1
19,81,§00
( ) Closing Stock of WIP (48,000) V
Total 19,33,600 Total 19,33,600

2. Schedule of Indirect Manufacturing Expenses·/ Production Overheads / Factory Overheads

Particulars f
Hire Charges of Factory 2,60,000 I V
Hire Charges of Machinery (5,00,000 x 0.70) 3,50,000, V
Repairs and Maintenance (assumed in Factory) 1,80,000
y
Total Factory Overheads 7,90,000

8. Hari gives the following Manufacturing Ale and related Notes. You are required to prepare the Revised Manufacturing Ale.
Particulars f000s Particulars f000s
..To Materials Consumed: By Net Factory Cost of production, 6,400
Opening Stock of Raw Materials 900 transferred to Trading A/c (bal. fig) 100
Add: Purchases of Raw Materials 3,400 By NRV / Sale Value of By-Products
! Sub-Total 4,300
• Less: Closing Stock of Raw Materials 300
Net balance =Materials Consumed 4,000
To Direct Manufacturing Wages 800
To Direct Expenses, if any 300

8B.10
 Sub-Total p.
Financial Statements - Final Accounts of Manufacturing Entities
ro production Overheadsrune Cost
Sub-Total G 5,100
. ross F 900
Add: Opening Stock of W actory Cost
. IP 6,000
Less: Closing Stock of WIP
750
_______ Total
(250)
Notes:
Purchase 0 f M . 6,500 6,500
• ach1nery ~3 0
10% by the Firm ' 0,000 had be .
Wages includ ; 1 en wrongly included in Raw Material Purchase Ale. Machinery is depreciated at
• e, ,00 ooo •
Direct Ex ense ' Paid to Labour t Off .
• . sand Production Ov h a ice, which has no connection with Production Activity.
0
-~-~ir_ec_t_Ex...:!p:.:'.enses er eads include the following items-
Hire Charges for Machinery - - - ~000s
Production OH ~000s
Delivery Charges to Customers 30 Electricity Charges (of which 25% relates to Office) 400~
Royalty on Production 20 Depreciation on Machinery 160
Technical Support Fees (Prod . 180 Lubricants, Consumables and Machinery Maintenance 200
Total uct1on) 70 140 ..
300 Indirect Labour and Other Production Overheads
------....::.:.:.__
- ..y Total 900
solution:
• Purchase of Machinery . Working Notes for treatment of various items
11
added back to the amou~: ~~ redu~e<! from the Value of Raw Materials Purchase. 10% Depreciation thereon will be
0
• Wages paid to Labo epreciation on Machinery, i.e. 10% on 3,00,000 = 30,000.
Labour/ Salaries de~;~ttOffipice will be reduced from Direct Manufacturing Labour, and will be added back to Indirect
0 rofit and Loss Account.
.
• Delivery Charges to Cust . .
will be debited as a Ex omer~ is an item of "Selling and Distribution OH". It will be reduced from Direct Expenses, and
.. n pense mProfit and Loss Account.
• Electricity Charges relati tO Offi .
debited to Ma t ct . ng ice,_ i.e. 25% on 4,00,000 = 1,00,000 will be reduced from Production Overheads
. nu a unng Account. This amount will be debited as an Expense in Profit and Loss Account.
• Revised Amount of Production Overheads is as under -

/ ' ,, ,, .
Elec.Charges (400 - 100) = 300~7 D~epreciation on Machinery (160+30) = 190 + Lubricants 200 + Others 140 = 830. ,//
~

Dr. Manufacturing Account for the year ended ............. (Revised) Cr.
Particulars ?000s Particulars f0OOs
To Materials Consumed: By Net Factory Cost of production,
Opening Stock of Raw Materials / 900, ~ Transferred to Trading Ne (b/f) 5,910
~
(+) Purchases of Raw Materials 3,400 - 300 = 3,100' By NRV / Sale Value of By-Products 100,V
Sub-Total 4,000 ~

(-) Closing Stock of Raw Materials (300) ~

Materials Consumed
To Direct Manufacturing Labour
3,700
800 - 100 = 700
300- 20 = 280
vv1
To Direct Expenses
Prime Cost 4,680
To Production Overheads 830
5,510
r1
Gross Factory Cost
(+)Opening Stock of WIP
750 V'
6,260
(250) ~ /
~ (-) Closing Stock of WIP
6,010 Total 6,010
Total

• g Ale Creditors Ale and Trading Ale provided by M/s Shivam. There are certain figures
• are the Manufacttsunn
9• FoIIowing ,
missing from these Accoun •

SB.11

l
Padhuka's Practical Learning Series Accounting - For CA fou ndation
°
Additiona11nf rmation.•
1. Raw Material (RM) Ale 0
f Machinery worth f 12,00,000 on 1•t ApMI
To Opening Stock 1,27,000 By RM Consumed - (a) Purchase m·itted Depreciation Rate is 15%.
has been o • .
To Creditors Ale - By Closing stock - (b)
Wages include following -
• Paid to Factory Workers - f 3, 15,000,
2. Creditors Ale
15,70,000 • Paid to Labour at Office - f 50,000
To bank Ale 23,50,000 By balance b/d
Direct Expenses include the following -
To balance c/d 6,60,000 (c)
Electricity Charges
3. Manufacturing Ale • pertained to Office f 80,000 of which 25%
To Raw Material A/c - By Trading Ale 17,44,000
To Wages
• Fuel charges of· t 25,000
3,65,000
• Freight inwards oft 32,000
To Depreciation 2,15,000 Delivery charges to customers of ~ 22,000
•
To Direct Expenses 2,49,000
You are required to prepare revised Manufacturing Ale and Raw Material A/c.
-
Solution: 1. Creditors A/c (to find Purchases)
Particulars Particulars

To Bank A/C 23,50,000 By Balance b/d 15,70,000

To Balance c/d 6,60,000 By Raw Material A/c - Purchases (b/f) 14,40,000

30,10,000 30,10,000

2. Manufacturing A/c (to find Raw Materials Consumed)

Particulars t Particulars
To Raw Material A/c - Consumed (b/f) 9,17,000 By Trading A/c 17,44,000
To Direct Wages - Note 1
To Depreciation - Note 2
To Direct Expense= 2,49,000 - 20,000 - 22,000 - J,lote 3 ~~1-'l ~~-
17,44,000 17,44,000
Notes: I
1. Wages paid to Factory Workers should only be included in Direct Wages.
2. Depreciation = Given 2,15,000 + (12,00,000 x 15%) = 3,95,000
3. Direct Expense should not include Electricity charges pertain to Office (i.e. 25%) and Delivery charges to customers.

3. Raw Material (RM) A/ c

Particulars t Particulars
To Opening Stock A/c '•1,27,000 By RM Consumed - From Manufacturing A/c 9,17,000
To Creditors A/c - From Creditors A/c 14,40,000 By Closing stock 6,50,000
,15,67,000 15,67,000

I
• I

8B.12