CONDUCTED BY LEO GREENDLINGER, B. C. S.

The first of the two following problems is question 1-2 in Practical Accounting, set by the University of the State of New York at the June, 1907, examination. The second is the first afternoon question in Practical Accounting set by the same State Board at the October, 1907, examination. Both problems are solved at the request of subscribers of THE JOURNAL, by W. H. Dennis, B. C. S., C. P. A., Professor of the Principles and Practice of Accounting in the New York University School of Commerce, Accounts and Finance. Question 1-2 of the June, 1907, examination is also solved, additionally, by one of the leading certified public accountants of this State, showing the different forms in which the questions can be answered, according to the view taken.

QUESTION 1-2 (June, 1907).

The books of a manufacturing concern, operating under a system of cost accounts, show the following conditions at the opening of the fiscal year: Raw materials in storeroom, $15,621.42; factory pay roll, applied and distributed but not paid, 2 days, $831.78; partly manufactured goods, at prime cost, $63,888.44; and the further value of $8,037.17, to cover factory burden, also $12,074.92 to cover management charges; finished wares in stock at total cost of $21,656.01.

The financial operations during the ensuing year include: purchases of raw materials, $80,416.45; factory pay rolls, $125,793.90; factory expense including wages not applied to cost accounts, $24,846; management expenses, $38,100; interest paid on loans, $1,200; income from investments $5,004.

The manufacturing operations during the same year comprehend: raw materials issued on requisition for consumption, $79,820.34; wages applied and distributed to manufacturing cost, $120,250.40, and to factory expenses, $5,959.39 included in the sum stated in preceding paragraph.

Finished goods transferred from factory to warerooms, at prine cost, covering materials, $78,542.58, and labor, $118,333.75. The trading operations during the same year comprehend: cost of goods sold, $251,949.90; proceeds from goods sold, $302,339.88.

At the close of the year the partly completed goods included, in addition to prime cost, the further elements of value to cover factory and management expenses in the amounts respectively of $8,439.02, and $12,676.66, and factory pay roll for three days amounting to $1,247.67, which has been applied and distributed, though not due till the close of the current work.

The basis of the apportionment On Cost or Overhead Charges was as follows: factory expense 20% to materials and 80% to labor; management expenses 30% to materials and 70% to labor.

The transactions of the previous year in round amounts were used in calculating the current year's apportionments, viz: Materials, $75,000; labor, $115,000; factory expense, $24,000; management expense, $36,000. Open the general ledger accounts that control the cost accounts; show the operation of each and the net profits resulting; also calculate the percentage to be added to each $1 of material and of labor to give the total

cost.

RAW MATERIALS.

Manufacturing Account, being amount of
requisitions for consumption.

$79,820.34

Balance carried down

16,217.53

$96,037.87

$96,037.87

$16,217.53

Balance at commencement, being two
days' labor applied and distributed but
not paid..

Manufacturing Acc't: Wages applied and
distributed.

Factory General Expense: Am't not
applied to prime cost.

Balance, Three days' wages applied and distributed..

FACTORY PAY ROLL.

FACTORY GENERAL EXPENSE.

$32,883.17

Balance, Inventory.

$8,439.02

MANAGEMENT EXPENSE.

MANUFACTURING ACCOUNT.

79,820.34

Requisitions for consumption.

factory to warerooms at prime cost, viz.:

$78,542.58