Company Final Accounts
Company Final Accounts (including a Manufacturing Account) |
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Key Learning Outcomes
- Understand how to position each item in the final accounts and balance sheet.
- Understand how to lay out the final accounts and balance sheet.
- Understand how to do the adjustments.
- Know the maximum time for this question ‒ 54 minutes.
Introduction: Company Final Accounts
Company Final Accounts including a Manufacturing Account is one of three final accounts questions asked as Question 1 in Section 1 of the Accounting examination over the years as follows:
(1) Company Final Accounts including a Manufacturing Account: 1997, 2001, 2005, 2009, 2011, 2013.
(2) Company Final Accounts: 2000, 2002, 2004, 2007, 2012, 2015.
(3) Sole Trader ‒ Final Accounts: 1999, 2003, 2006, 2008, 2010, 2014.
The years stated above are listed solely to assist revision.
Section 1 of the Accounting examination is worth 120 marks out of a total of 400 marks (30%).
The choice in Section 1 is to answer either Question 1 only (120 marks) or to answer any two questions from Questions 2, 3, 4 (60 marks each).
Practical Matters:
(1) Always do the solution in the same way ‒ this will increase speed and confidence.
(2) Use only one pen in the solution ‒ use of colour slows down the work.
(3) Write the workings on the left and right hand side of a double page.
(4) Write the solution on the left and right hand side of a double page.
(5) Do not try to predict the examination paper ‒ study all possible questions in this section.
Sample Exam Q&A
Question |
Bond Ltd, has an Authorised Capital of €1,400,000 divided into 800,000 Ordinary Shares at €1 each and 600,000 8% Preference Shares at €1 each. The following Trial Balance was extracted from its books at 31/12/2015:
The following information and instructions are to be taken into account:
(i) | ![]() The figure for finished goods includes stock which cost €4,500 but now has a realisable value of €2,800. |
(ii) | Finished goods, sent to a customer on Dec. 31 on a ‘Sale or Return’ basis, were treated incorrectly as a credit sale. The recommended retail selling price of these goods was €9,000, which is cost plus 25%. |
(iii) | Repairs to plant and machinery amounting to €2,500 were carried out during the year by one of the firm’s employees. An amount of €600 of this expenditure consisted of parts taken from the firm’s stocks while the remainder represented wages. |
(iv) | Provide for depreciation on plant and machinery at the annual rate of 20% of cost from the date of purchase to the date of sale.
NOTE: On 31/10/2015 machinery, which cost €15,000 on 30/06/2011, was traded in against a new machine which cost €36,000. An allowance of €1,500 was given on the old machine. The cheque for the net amount of this transaction was entered in the bank account but was incorrectly treated as a purchase of raw materials. These were the only entries made in the books in respect of this transaction. |
(v) | The suspense figure arises as a result of the incorrect figure for debenture interest (although the correct entry had been made in the bank account) and discount received €500 entered only in the creditors account. |
(vi) | The figure for bank in the Trial Balance has been taken from the firm’s bank account. However, a bank statement dated 31/12/2015 has arrived showing an overdraft of €30,220. A comparison of the bank account and the bank statement has revealed the following discrepancies:
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(vii) | The Directors recommend that:
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You are required to prepare:
(a) A Manufacturing, Trading and Profit and Loss Account for the year ended 31/12/2015. (b) Balance Sheet as at 31/12/2015. |
Sample Answers (a & b) |
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Manufacturing Account of Bond Ltd. for the year ended 31/12/2015
Trading and Profit and Loss Account for the year ended 31/12/2015 Balance Sheet as at 31/12/2015 Workings:
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Student Activity
Q1 | State where the following items would be shown in the final accounts:
(a) Discount (Net) ‒ credit side of Trial Balance. |
Q2 | State the layout of the following:
(a) Manufacturing Account. |
Q3 | State how the following information should be treated:
An invoice has been received for raw materials costing €20,000 which were in transit on 31/12. No record has been made in the books. |
Q4 | State how the following information should be treated:
During the year the company built an extension to the warehouse. The work was carried out by the company’s own employees. The cost of their labour €25,000 is included in factory wages. |
Q5 | State how the following information should be treated:
Patents €75,000 (31/12/2015) are being written off over 8 years which commenced in 2012. |
Q6 | State how the following information should be treated:
Factory Buildings (Cost €590,000 and Acc. Dep. €130,000) are to be depreciated at 2% of cost. At the end of the year the company revalued the buildings at €700,000. |
Q7 | State how the following information should be treated:
The directors are proposing that Corporation Tax of €35,000 be provided for. |
Q8 | State how the following information should be treated:
Goods should be transferred from factory at Current Market Value €850,000. (Cost of Manufacture is €811,500). |
Student Activity Answers
You can download/view the answers to the above questions here