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A.SHAH SONS deals in a manufacturing concern.

Following data
are extracted from its trial balance as on June 30, 2004

Opening Raw Material Nil


Purchases 100,000
Purchase Returns 5,000
Direct Labor 45,000
Property Tax of Head Office 5,000
Insurance Expense of Factory 3,000
Financing taken on 1.1.2004 from UBL @12% interest p.a. 500,000
Plant misc. expense 10,000

Salaries and bonus to management staff

to Finance Dept. 43,000


to Marketing Dept. 40,000
to Manufacturing Dept. 42,000

Car plant for manager, purchased on 1.01.04 750,000


Machinery imported on 1.07.03 500,000
Custom Duty on machinery 25,000
Sales tax paid on import of machinery 25,000
Sales 500,000
Books for Technical Dept. 500
Purchased Land 500,000
Legal charges on Land Purchase 70,000
Gain on sale of fixed asset 7,000
Purchase Discount 2,000
Advertising Expense 40,000
Rent Income 25,000
Dividened Income 10,000
Quality Control Expenses 8,000
Insurance on Plant Manager's Car 3,000
Indirect Labor 20,000
Indirect Material 10,000
Electricity Bill of Plant 28,000

As of 30-06-04 raw material of Rs.20,000 was in hand,


Opening Work in Progress was Rs. 10,000 & closing inventory of WIP was Rs. 15,000
Inventory of Finished goods at the beginning and closing was Nil
Depreciation @ 10%

Required:
(a) Work out total manufacturing cost, Cost of goods manufactured & Cost of goods sold.
(b) Prepare Profit & Loss account/income statement
Total Manufacturing Cost

Direct Material
Opening Raw Material Nil
Add: Purchases 100,000
Less: Purchase Returns 5,000
Less: Purchase Discount 2,000
Total Raw Material Available during the year 93,000
Less: Closing Raw Material 20,000
Total Raw Material Consumed during the year 73,000
Direct Labor 45,000
Factory Overheads
Indirect Labor 20,000
Indirect Material 10,000
Insurance Expense of Factory 3,000
Plant misc. Expenses 10,000
Salaries to Staff (Manufacturing Dept.) 42,000
Dep. on Machinery (1 year period) 55,000
Insurance on Plant Manager's Car (6 months prd.) 1,500
Dep. on Car for Plant Manager (6 months prd.) 37,500
Books for Technical Dept. 500
Quality Control Expenses 8,000
Electricity Bill of Plant 28,000 215,500
Total Manufacturing Cost 333,500

Cost of Goods Manufactured

Total manufacturing Cost 333,500


Add: Opening Work in Progress 10,000
Total Work in Progress Available during the year 343,500
Less: Closing Work in Progress 15,000
Cost of goods manufactured 328,500

Cost of Goods Sold

Cost of goods manufactured 328,500


Add: Opening Inventory of Finished Goods Nil
Total Inventory Available during the year 328,500
Less: Closing Inventory of Finished Goods Nil
Cost of goods sold 328,500
PROFIT & LOSS ACCOUNT/INCOME STATEMENT

Sales 500,000
Less: Cost of Goods Sold 328,500
Gross Profit 171,500

Less: Operating expenses

Salaries of Finance Dept.and Mark 83,000


Property Tax of Head Office 5,000
Advertising Expense 40,000 128,000
Operating Profit 43,500

Less: Taxes & Interest Expenses

Interest Expense 30,000 30,000


Net Profit 13,500

Add:
Rent Income 25,000
Dividend Income 10,000
Other Income (Gain on Sale of Fixed Asset) 7,000
42,000
Net Loss 55,500