Manufacturing Account Format.

Topics: Manufacturing, Generally Accepted Accounting Principles, Expense Pages: 9 (2156 words) Published: March 6, 2013
S5 Manufacturing Account/LWL

Manufacturing Accounts ( A.


Function of a Manufacturing Acccount For those businesses which deal with manufacturing products. It is common in today’s business to act both as manufacturer ( ) and retailer ( ). e.g Crocodile, Bossini, G2000, U2. What is the advantage as being a manufacturer as well as a retailer? Division of Costs The purpose of a Manufacturing Account is to ascertain Cost of Production ( ).


Cost of Production = Prime Cost + Factory Overheads + Opening Work in Progress – Closing Work in Progress C. Prime Cost ( ) Prime cost is the DIRECT expenses which can be traced back to each unit of production. It consists of: (1) Direct Materials ( ) (2) Direct Wages ( ) (3) Direct Expenses e.g. Royalty ( ) Factory Overheads ( ) Indirect expenses in the factory which helps production of goods. e.g. Indirect wages, rent and rates of the factory, depreciation of plant and machinery, factory fuel and power, etc. ) Work in Progress ( Where goods have not been completed, they cannot be sold in the year. For ease of accounts recording, the ‘whole’ of the Work-in-Progress is calculated. The treatment is the same as in Opening Stock and Closing Stock, i.e. + Opening WIP – Closing WIP




S5 Manufacturing Account/LWL


Format Company Name Manufacturing, Trading and Profit and Loss Account for the year ended 31 December 200X _________________________________________________________________ $ $ $ Raw Materials: Opening Stock Purchases (Raw Materials) Add : Carriage Inwards xxx xxxx xx _____ xxxx (xx) _____ xxxx ______ xxxx (xx) ____ xxxx xxx xxx ______ XXXX xxx xxx xx xxx xxx _____ XXXX ________ XXXX WORK-IN-PROGRESS Opening Work-in-Progress (1.1.200x ) Less: Closing Work-in-Progress (31.12.200y) xxxx (xxx) _____ PRODUCTION COST OF GOODS COMPLETED c/d 2

Less: Return Outwards

Less: Closing Stock (Raw materials) Cost of Raw Materials Consumed Direct Materials Direct Expenses (Royalty) PRIME COST FACTORY OVERHEADS: Factory rent and rates Fuel and power Indirect wages Lubricants ( ) Depreciation of plant and machinery

XXX _______ XXXX

S5 Manufacturing Account/LWL

===== (Trading Account) Finished Goods Sales Less: Cost of Goods Sold Opening Stock Add: Production Cost of Goods Completed b/d

xxxx xxx xxxx _____ xxxx (xxx) _____

Less: Closing Stock

(xxx) _____ XXX

GROSS PROFIT Less : Expenses Administrative Expenses (Office expenses) e.g. Office rent and rates Administrative salaries General adminstration expenses Depreciation of office furniture, office equipment Selling and Distribution Expenses e.g. Advertising expenses Sales Commissions Carriage Outwards Financial Expenses e.g. Discounts allowed Bad Debts Provisions for Bad Debts

(xxx) _____ NET PROFIT FOR THE YEAR XXX ====


S5 Manufacturing Account/LWL

Balance Sheet as at 31 December 200X FIXED ASSETS Cost Net Book Value xxxxx xxx xxxx xxxx xxx xxxx _______________________________ xxxxx xxx xxxx =============== xxx xx xxx xxx (xxx) _____ Accumulated Depreciation

Machinery Office Equipment

CURRENT ASSETS Stock : Raw Materials Work in Progress Finished Goods Debtors Less: Provisions for Bad Debts Prepaid Expenses Bank Cash

xxx xx xxx xxx _____ xxxx

Less: CURRENT LIABILITIES Creditors Accrued expenses

xxx xx ___ (xxx) _____ xxx _____ xxxx ==== xxxx xxx ______ xxxx (xxx) _____ xxxx ==== 4

Working Capital

FINANCED BY: Capital on 1.1.200x Add: Net Profit for the year

Less: Drawings

S5 Manufacturing Account/LWL


Difficult Entries: Example: Trial Balance for the year ended 31 December 2002 Dr. $ Opening Stock: Loose Tools Purchases of loose tools Carriage inwards Wages and salaries: administrative staff 12,000 36,000 195,000 420,000 Cr. $

Notes: 1. Closing Stock: Loose Tools $8,000 2. Salaries of administrative staff included an amount of $80,000 payable to th factory manager as a bonus. Answer: Manufacturing Account for the year ended 31...
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