QUESTION 2

The trial balance of Perniagaan Bina Alam for the year ended 30 June 2005 were as
follows:
RM RM
Capital 270,915
Building - Factory (cost RM1 30,000) 128,000
- Office (cost RM75.000) 72,000
Plant & Machinery (cost RM55.000) 50,000
Stocks as at 1 July 2004:
Raw materials 16,500
Work in progress (at prime cost) 9,600
Finished goods (at market value) 12,000
Purchases of raw materials 78,000
Direct wages 49,200
Indirect factory wages 3,500
Office salaries 17,600
Sales 201,000
Power and electricity 5,700
Advertising expenses 2,900
Repairs to machinery 11,320
Bad debts 980
Provision for doubtful debts 1,150
General expenses 500
Insurance 4,030
Bank 15,450
Debtors & Creditors 13,000 15,300
Accrued general expenses at 1 July 2004 350
Provision for unrealized profit at 1 July 2004 1,565

TOTAL 490,280 490,280

Additional information:
1. Finished goods are transferred from the factory at production cost plus 15%.

2. Stocks as at 30 June 2005:

RM
Raw material 16,820
Work in progress (at prime cost) 15,980
Finished goods (at market value) 7,600

3. Accrued expenses as at 30 June 2005:

RM
General expenses 650
Power and Electricity 385

4. Advertising expenses is for the period 1 March 2005 to 31 December 2005.

5. General expenses, power and electricity and insurance are to be apportioned

in the ratio of 1:2 between factory and administration respectively.

6. Provision for depreciation is to be charged as follows:

Plant & Machinery 10% on cost
Buildings 5% on cost

You are required to:

a. Prepare the Manufacturing, Trading, Profit & Loss accounts for the
year ended 30 June 2005. (20 marks)
b. Explain why it is important to provide for the unrealized profit on the
unsold (self manufactured) stock at the end of the accounting period.
(3 marks)
(Total: 23 marks)