Trading Account of a Manufacturing Company

Written by True Tamplin, BSc, CEPF®

Reviewed by Subject Matter Experts

Updated on April 13, 2023

In the trading account of a manufacturing company, the production cost figure (as calculated by drawing up the manufacturing statement) should be used in place of the purchases figure.

Opening stock of finished goods should be added to production cost (or cost of goods manufactured) to arrive at the value of goods available for sale.

The value of the closing stock of finished goods should be deducted from this figure in order to calculate the cost of goods sold during the year.

Example

The following information is available from the books of a manufacturing company. Using this information, prepare the company's manufacturing statement and income statement (in vertical form).

Trading Account of a Manufacturing Concern

Solution

Working and Calculations
Manufacturing Statement
Income Statement

Trading Account of a Manufacturing Company FAQs

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon, Nasdaq and Forbes.