Principles of Accounting: Solution to Manufacturing Accounts Example

////Principles of Accounting: Solution to Manufacturing Accounts Example

Principles of Accounting: Solution to Manufacturing Accounts Example

ZIMSEC O Level Principles of Accounting: Example question Manufacturing Accounts

  • This is a solution to a Manufacturing Account question that was posted here
  • The introduction to Manufacturing Accounts and concepts related to the topic can be found here
  • We explored the nature and format of Manufacturing Accounts here
  • We will start by showing the Manufacturing Account
  • Then the Income Statement ( Trading and Profit and Loss Account)
  • Finally we will show the Statement of Financial Position

E Makonese

Manufacturing Account for the year ended 31 December 20×8

Opening stock of raw materials13 260
Add Purchases

57 210

70 470
Less Closing Stock of raw materials

(14 510)

55 960
Manufacturing Wages

72 650

Prime Cost128 610
Add Overheads
Factory lighting and heating7 220
General Expenses: Factory8 100
Factory Rent6 100
Machinery depreciation

3 000

24 420
Production cost of completed goods(A)

153 030


  • The total factory wages are obtained by adding the accrued wages of $550 to $72 100

E Makonese

Income statement for the year ended 31 December 20×8

Sales194 800
Less Cost of Sales
Opening stock of finished goods41 300
Add Production cost of completed goods (A)

153 030

194 330
Less closing stock of finished goods

44 490

149 840

Gross Profit44 960
Less Expenses
Office salaries17 740
Office General Expenses1 940
Office Rentals2 560
Office heating and ligting1 490
Sales rep's commission11 688
Delivery van expenses1 760
Office equipment Depriciation600
Delivery Van depreciation


38 978

38 978


  • Prepaid Office rent of $140 has to be excluded from the current year’s calculations
  • Delivery van is not part of the production department hence its depreciation is not included in the manufacturing account. In cases where the van is used to ferry raw materials as well the depreciation expense would have to be apportioned according to usage or any other rational that management might deem appropriate.

E Makonese

Statement of Financial Position as at 31 December 20×8

Non-Current AssetsCostDepreciationNet Book Value (NBV)
Machinery40 00014 40025 600
Office Equipment9 0001 4007 600
Delivery Van

6 800

1 800

5 000

55 80017 60038 200
Current Assets
Inventories: Finished Goods44 490
Raw Materials14 510
Debtors34 200
Prepaid Expenses (Rent)140


109 482
Less Current Liabilities
Creditors9 400
Accrued Expenses( Wages)


(9 950)

99 532


Financed By:
Capital155 950
Add Net Profit5 982
Less Drawings

(24 200)



  • All inventory balances are shown under Current Assets in the Statement of Financial Position.
  • If we had them we would have shown Work In Progress Inventories here as well

To access more topics go to the Principles of Accounts Notes.

By |2018-02-23T09:49:43+00:00February 23rd, 2018|Notes, Ordinary Level Notes, Principles of Accounts Notes|Comments Off on Principles of Accounting: Solution to Manufacturing Accounts Example

About the Author:

He holds an Honours in Accountancy degree from the University of Zimbabwe. He is passionate about technology and its practical application in today's world.
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