Tutorial 2

BBFA 1063 Financial Accounting

 Question 1
(a)
Jetta Food Manufacturer Sdn. Bhd.
Manufacturing account for the year ended 31 December 2019

Cost of raw materials consumed RM RM

Opening raw materials inventories 220,000
Purchases of raw material 1,645,000
Less: Purchase returns (6,100)
Add: Carriage inwards 18,000 1,656,900
1,876,900
Less: Closing raw materials inventories (240,000)
Cost of raw materials consumed 1,636,900

Direct labour 97,000

Royalty 15,000
Prime cost 1,748,900
 Prime cost 1,748,900
Add: Factory overheads (indirect costs related to factory)
Indirect material 53,000
Factory supervisors’ salaries 73,000
Indirect labour 42,000
Maintenance of machinery 33,000
Utilities (7) (36,000+600) x 2/3 24,400
Rent expenses (7) (86k x 2/3) 57,333
Insurance for machinery 6,000
Depreciation-machinery (150k-20k) x10% 13,000 301,733
Total manufacturing cost 2,050,633
Work-in-progress
Opening work-in-progress inventory 57,000
Less: Closing WIP inventory (75,000) (18,000)
Cost of finished goods manufactured 2,032,633
Add: Factory profit (2,032,633 x 10%) 203,263
Transfer price of finished goods produced 2,235,896
 (b)
Allowance for unrealised profit
Dec 31 Bal c/d 54,545 Jan 1 Bal b/d 50,000

Dec 31 SOPL 4,545

54,545 54,545

Factory profit 203,263

Closing FG x 600k x
Transfer price 2,235,896
 c)
Jetta Food Manufacturer Sdn. Bhd.
Statement of profit or loss for the year ended 31 December 2019
RM RM
Sales 2,750,900
Less: Cost of goods sold
Opening FG inventory 510,000
Add: Transfer price of FG produced 2,235,896
2,745,896
Less: Closing FG inventory (600,000)(2,145,896)
Gross profit 605,004
Add: factory profit 203,263
Less: Increase in AFURP (4,545)
Realised factory profit 198,718
803,722
Add: Other income
Commission received (6k-600) 5,400
809,122
 Less: Expenses
Distribution costs (cost related to sales & delivery)
Commission for salesmen 47,000
Carriage outwards 18,000 (65,000)

Administrative expenses – related to office

Salaries for accounting staff (31k+1k) 32,000
Maintenance of office equipment 15,000
Utilities (36,000+600) x 1/3 12,200
Rent expenses (86k x 1/3) 28,667
Doubtful debts (2) 1000
Depreciation-office equipment (6) (50k x 15%) 7,500 (96,367)
Profit for the year 647,755
 d)
Jetta Food Manufacturer Sdn. Bhd.
Statement of financial position as at 31 Dec 2019
RM RM RM
Non-current assets Cost Acc Dep NBV
Machinery 150,000 (33,000) 117,000
Office equipment 50,000 (22,500) 27,500
200,000 (55,500) 144,500
Current assets
Inventories:
Raw materials 240,000
Work in progress 75,000
Finished goods 600,000
Less: AFURP (54,545) 545,455

Trade receivables 50,000

Less: AFDD (2,000) 48,000
Bank 53,000 961,455
Total assets 1,105,955
 Equity and liabilities
Equity
Share capital 330,000
Retained earnings (42,000 + 647,755 ) 689,755
1,019,755

Non-current liability
Loan 42,000

Current liabilities
Trade payables 42,000
Accrued salaries 1,000
Accrued utilities 600
Commission received in advance 600 44,200
Total equity and liabilities 1,105,955
Question 2
Indirect cost related to factory Sales & delivery Office
(a) Happy Land Sdn. Bhd.
Schedule of allocation of expenses
Production Selling Administration
RM'000 RM'000 RM'000
Indirect materials 90
Interest on loan (300 x 10%) 30
Plant maintenance (50 - 15) 35
Office equipment repair 15
Salaries (480 - 60) x 80%, 5%, 15% 336 21 63
Travelling 170
Auditors' fees 20
Advertising 30
Legal fees 10
Directors' remuneration (140 + 6) 146
Water and electricity (30 + 10) x 70%, 10%, 20% 28 4 8
Depreciation on building (90%, 5%, 5%) 36 2 2
Depreciation on plant and machinery 80
Depreciation on office equipment 6
605 237 290
(b) Happy Land Sdn. Bhd.
Manufacturing account for the year ended 31 October 2019
RM'000 RM'000
Opening raw materials 228
Purchases of raw materials 1,510
Carriage inwards on raw materials 10 1,520
1,748
Closing raw materials (285)
Cost of raw materials consumed 1,463
Direct labour costs 110
Royalty 100
Prime costs 1,673
Production overheads 605
Total manufacturing cost 2,278
Opening work in progress 45
Closing work in progress (40)
Cost of finished goods manufactured 2,283
Factory profit (2,283 x 30%) 685
Transfer price of FG produced 2,968
(c) Allowance for unrealised profit account
RM'000 RM'000
Bal c/d 157 Bal b/d 149
SOPL 8

157 157

Closing FG x Factory profit = 680 x 685 / 2,968

Transfer price
(d)Happy Land Sdn. Bhd.
Statement of profit or loss for the year ended 31 October 2019

RM'000 RM'000
Sales 4,600
Less: Cost of sales
Opening FG 646
Transfer price of FG produced 2,968
3,614
Closing FG (680) (2,934)
Gross profit 1,666
Factory profit 685
Less: Increase in allowance for unrealised profit (8)
Realised factory profit 677
2,343
Other income
Rental income (100 + 11) 111
Dividend income 20 131
2,474
Other income
Rental income (100 + 11) 111
Dividend income 20 131
2,474
Selling and distribution expenses (237)
Administration expenses (290)
Profit before tax 1,947
Tax expenses (88)
Profit for the year 1,859
(e)Happy Land Sdn. Bhd.
Statement of financial position as at 31 October 2019
RM'000 RM'000 RM'000
Non-current assets Cost Acc. Dep. NBV
Land and building 4,500 (500) 4,000
Plant and machinery 1,000 (480) 520
Office equipment 50 (30) 20
5,550 (1,010) 4,540
Current assets
Inventories:
Raw materials 285
Work in progress 40
Finished goods 680
Allowance for unrealised profit (157)
Trade Receivables 550
Accrued rental income 11
Prepaid salaries 60
Cash at bank 60
1,529

Total assets 6,069

Equity and liabilities
Share capital [2,500 + 250] 2,750

Reserves
Share premium [500 - 250] 250
Retained earnings [446 + 1,859 – 400] 1,905
4,905
Non-current liability
10% Bank loan 300

Current liabilities
Payables 400
Accrued interest on loan [30 - 20] 10
Accrued directors' remuneration 6
Accrued water and electricity 10
Dividend payable 400
Tax payable (88 - 50) 38
864

Total equity and liabilities 6,069