Unit: Financial accounting
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Login to Access| Sh. | Sh. | |
| Retained profit as at 1 January 2024 | 1,699,000 | |
| Direct wages | 20,056,000 | |
| Accounts receivables | 20,000,000 | |
| Accounts payables | 18,149,840 | |
| Bank | 1,500,000 | |
| Purchase of raw materials | 20,744,000 | |
| Net sales | 103,401,640 | |
| Building (Net book value) | 6,800,000 | |
| Motor vehicle (Net book value) | 4,800,000 | |
| Office equipment (Net book value) | 3,420,000 | |
| Plant and machinery (Net book value) | 20,220,000 | |
| Allowance for credit loss | 40,000 | |
| Directors salaries | 2,006,120 | |
| Inventory as at 1 January 2024: | ||
| Raw materials | 2,800,000 | |
| Work-in-progress | 5,040,000 | |
| Finished goods | 10,000,000 | |
| Selling and distribution costs | 11,002,440 | |
| Rent and rates | 3,609,360 | |
| Office salaries | 6,640,520 | |
| Insurance | 804,640 | |
| Other indirect factory costs | 1,602,520 | |
| Electricity and water | 3,041,640 | |
| General administrative expenses | 2,803,240 | |
| Preference dividend | 400,000 | |
| Ordinary share capital | 16,000,000 | |
| 10% preference shares | 8,000,000 | |
| 147,290,480 | 147,290,480 |
| 1. | Inventories as at 31 December 2024 were valued as follows: | |
| Sh. | ||
| Raw materials | 9,400,000 | |
| Work-in-progress | 3,145,000 | |
| 2. | The company transfers output to the warehouse at a cost plus mark up of 25%. During the year ended 31 December 2024, the company produced 2,500 chairs. At the end of the year, 2,300 chairs produced during the year were sold. All opening inventories were sold during the year. |
| 3. | The allowance for credit loss was increased by Sh.15,000. |
| 4. | The company charges depreciation on all its fixed asset on reducing balance basis at the rates shown below: |
| 4. | Asset | Rate | Apportionment |
| Building | 2.5% | Administration | |
| Plant and machinery | 15% | Factory | |
| Office equipment | 10% | Administration | |
| Motor vehicle | 20% | 60% factory, 40% administration |
| 5. | As at 31 December 2024, there was an outstanding insurance premium of Sh.250,000 and prepaid rent amounting to Sh.275,000. |
| 6. | Rent and rates, insurance and electricity and water are to be apportioned in the ratio 4/5 to the factory and 1/5 to administration. |
| 7. | The directors have proposed the following:
|
| 8. | Corporate tax for the year ended 31 December 2024 amounts to Sh.12,500,000. |
Required: | |
| (i) | Manufacturing account for the year ended 31 December 2024. |
| (ii) | Statement of profit or loss for the year ended 31 December 2024. |
| Sh.“000” | Sh.“000” | |
| Ordinary share capital | 250,000 | |
| Retained earnings (1 September 2023) | 182,750 | |
| Share premium | 100,000 | |
| Bank | 17,100 | |
| Factory building (Land Sh.40,000,000) | 175,000 | |
| Plant and machinery | 200,000 | |
| Furniture and fittings | 120,000 | |
| Accumulated depreciation: | ||
| 6,000 | |
| 25,000 | |
| 20,000 | |
| Inventory (1 September 2023): | ||
| 55,000 | |
| 40,000 | |
| 39,000 | |
| Purchases and sales | 225,000 | 681,500 |
| Trade receivables and trade payables | 133,500 | 101,250 |
| Allowance for doubtful debts | 17,500 | |
| Bad debts | 1,500 | |
| Carriage on raw materials | 7,500 | |
| Direct wages | 120,000 | |
| Administrative salaries | 80,000 | |
| Electricity | 20,000 | |
| Maintenance and repairs | 34,000 | |
| Return outwards | 5,250 | |
| Sales and marketing expenses | 13,630 | |
| General administration expenses | 46,120 | |
| Insurance | 24,000 | |
| Bank charges | 6,250 | |
| Factory equipment hire | 22,500 | |
| Discount allowed | 9,150 | |
| 1,389,250 | 1,389,250 |
| 1. | Depreciation is provided at the following rates:
|
| 2. | Inventory as at 31 August 2024 was valued as follows:
|
| 3. | 2,000,000 units were produced during the year. |
| 4. | Allowance for doubtful debts is provided at the rate of 10% for debts between 6 months to 12 months and at the rate of 25% on debts above 12 months. The debtors aging analysis was as below: |
| 0 – 5 months | 6 – 12 months | Above 12 months | Total | |
| Sh.38,500 | Sh.45,000 | Sh.50,000 | Sh.33,500 | |
| 5. | Goods are transferred to the warehouse at a cost plus 20%. | |||
| 6. | Electricity, insurance and maintenance costs are to be apportioned in the ratio 3:1 between factory and administrative expenses. |
Required: | |
| (i) | Manufacturing account for the year ended 31 August 2024. |
| (ii) | Statement of profit or loss for the year ended 31 August 2024. |
| Sh.“000” | Sh.“000” | |
| Ordinary share capital | 42,000 | |
| Revenue reserve | 10,150 | |
| Bank | 8,592 | |
| Trade receivables | 11,080 | |
| Trade payables | 4,886 | |
| Factory building (Land Sh.4,200,000) | 10,500 | |
| Plant and machinery | 10,920 | |
| Motor vehicles | 7,112 | |
| Furniture and fittings | 3,400 | |
| Accumulated depreciation (1 April 2023): | ||
| - Buildings | 1,250 | |
| - Motor vehicles | 2,562 | |
| - Plant and machinery | 3,958 | |
| - Furniture and fittings | 980 | |
| Inventory (1 April 2023): | ||
| - Raw materials | 2,870 | |
| - Work-in-progress (WIP) | 4,830 | |
| - Finished goods | 9,100 | |
| Allowance for doubtful debts | 588 | |
| Bad debts | 406 | |
| Rates and insurance | 798 | |
| Direct wages | 6,440 | |
| Salaries | 7,560 | |
| Factory power | 1,890 | |
| Electricity | 1,386 | |
| Maintenance | 924 | |
| Returns outward | 266 | |
| Returns inward | 84 | |
| Advertising expenses | 728 | |
| Transport expenses | 1,946 | |
| Bank charges | 238 | |
| Sundry expenses | 2,436 | |
| Purchases and sales | 77,000 | 103,600 |
| 170,240 | 170,240 |
| 1. | Depreciation is provided using straight-line basis as follows: | |
| Asset | Rate per annum | |
| 30% | |
| 25% | |
| 12.5% | |
| 4% | |
| 2. | Inventory as at 31 March 2024 was valued as follows: | |
| Sh. | ||
| 11,690,000 | |
| 6,930,000 | |
| 8,680,000 | |
| 3. | Allowance for doubtful debts is provided at a rate of 10% of the trade receivables as at 31 March 2024. |
| 4. | Electricity, rates and insurance, sundry expenses and maintenance are to be apportioned in the ratio of 2:1 between factory and administration overheads. |
| 5. | Manufactured goods are transferred to the warehouse at total factory cost. |
Required: | |
| (a) | Manufacturing statement for the year ended 31 March 2024. |
| (b) | Statement of profit or loss for the year ended 31 March 2024. |
| (c) | Statement of financial position as at 31 March 2024. |
| Sh.“000” | Sh.“000” | |
| Sales | 5,220,294 | |
| Purchases of raw materials | 1,030,000 | |
| Returns inward | 37,412 | |
| Ordinary share capital | 900,000 | |
| 10% redeemable preference share capital | 300,000 | |
| Retained profit (1 July 2022) | 89,950 | |
| Land | 80,000 | |
| Building (cost) | 320,000 | |
| 15,000 | |
| Plant and machinery (cost) | 1,400,000 | |
| Office equipment (cost) | 220,000 | |
| Motor vehicles (cost) | 400,000 | |
| Accumulated depreciation (1 July 2022): | ||
| 401,000 | |
| 98,000 | |
| 160,000 | |
| Bank balance | 80,040 | |
| General administrative expenses | 63,011 | |
| Interim dividend on preference shares | 15,000 | |
| Factory power | 70,028 | |
| Light and heat | 102,054 | |
| Bank interest | 14,140 | |
| Insurance | 30,232 | |
| Rates | 80,342 | |
| Office salaries | 352,026 | |
| Advertising | 340,096 | |
| Directors’ salaries | 119,239 | |
| Inventory (1 July 2022): | ||
| Raw materials | 140,000 | |
| Work-in-progress | 252,000 | |
| Finished goods | 500,000 | |
| Plant repairs | 100,204 | |
| Rent | 80,126 | |
| Carriage inwards of raw materials | 170,026 | |
| Direct wages | 1,062,800 | |
| Trade receivables and trade payables | 1,000,000 | 712,452 |
| Allowance for doubtful debts (1 July 2022) | 2,000 | |
| 7,978,736 | 7,978,736 |
| 1. | Allowance for doubtful debts is to be maintained at 2% of the trade receivables balance as at 30 June 2023. |
| 2. | Inventory as at 30 June 2023 was valued as follows: | |
| Raw materials | Sh.116,000,000 | |
| Work-in-progress | Sh. 64,000,000 | |
| 3. | Light and heat of Sh.1,500,000 and rent of Sh.2,400,000 were accruing as at 30 June 2023, while rates of Sh.4,200,000 and insurance of Sh.3,200,000 relates to the period ending 30 June 2024. |
| 4. | Rent, rates, light and heat as well as insurance are to be apportioned in the ratio 80% to factory and 20% to administration. |
| 5. | Depreciation is to be provided at the following rates: | |||
| Rate per annum | Basis | Allocated to | ||
| Building | 2.5% | Cost | Administration | |
| Plant and machinery | 10% | Cost | Factory | |
| Office equipment | 10% | Cost | Administration | |
| Motor vehicles | 25% | Cost | Distribution | |
| 6. | The company completed 2,000 units during the year and only 150 units were in the inventory as at 30 June 2023. |
| 7. | Corporation tax is to be provided at the rate of 30%. |
Required: | |
| (a) | Manufacturing statement for the year ended 30 June 2023. |
| (b) | Statement of profit or loss for the year ended 30 June 2023. |
| Sh.“000” | Sh.“000” | ||
| Capital accounts: | Peter Mwangi | 115,000 | |
| Aloyce Onyango | 107,000 | ||
| Drawings: | Peter Mwangi | 8,000 | |
| Aloyce Onyango | 6,400 | ||
| Trade receivables and trade payables | 22,800 | 28,560 | |
| Balance at bank | 31,400 | ||
| Plant and machinery at cost | 57,600 | ||
| Loose tools at cost | 16,800 | ||
| Sales | 160,000 | ||
| Motor vehicles at cost | 33,600 | ||
| Raw materials purchased | 44,000 | ||
| Direct factory wages | 40,800 | ||
| Electricity expenses | 13,600 | ||
| Indirect factory wages | 16,000 | ||
| Plant and machinery repairs | 10,880 | ||
| Motor vehicle running expenses | 19,200 | ||
| Rent and insurance | 18,880 | ||
| Administrative staff salaries | 34,400 | ||
| Administrative expenses | 16,800 | ||
| Sales and distribution expenses | 20,000 | ||
| 411,160 | 411,160 | ||
| 1. | Inventories as at 31 December 2022 were as follows: | |
| Sh.“000” | ||
| Raw materials | 15,200 | |
| Work-in-progress | 19,440 | |
| Finished goods | 8,000 | |
| 2. | As at 31 December 2022, accrued electricity expenses amounted to Sh.10,400,000 while prepaid rent and insurance amounted to Sh.7,840,000. |
| 3. | The following expenses are to be apportioned between the factory and administration in the ratios indicated: |
| 3. | Factory | Administration | |
| Motor vehicle running expenses | ½ | ½ | |
| Electricity expenses | ⅔ | ⅓ | |
| Rent and insurance | ¾ | ¼ | |
| Plant and machinery repairs | ⅘ | ⅕ | |
| Motor vehicle depreciation | ½ | ½ |
| 4. | The estimated useful life of plant and machinery is 10 years while that of motor vehicles is 4 years. The partnership uses the straight-line method to provide for depreciation on motor vehicles and plant and machinery. |
| 5. | The partners share profits and losses equally. |
| 6. | Allowance for doubtful debts is to be made at the rate of 5% of the accounts receivable as at 31 December 2022. |
| 7. | Manufactured goods were transferred from the factory to the warehouse at Sh.85,600,000. |
| 8. | Loose tools as at 31 December 2022 were valued at Sh.13,600,000. |
Required: | |
| (a) | Manufacturing and statement of profit or loss for the year ended 31 December 2022. |
| (b) | Statement of financial position as at 31 December 2022. |
| Sh.“000” | Sh.“000” | |
| 240,000 ordinary shares of Sh.100 each | 24,000 | |
| Retained earnings (1 January 2021) | 3,000 | |
| Factory land and building at cost (land Sh.11,000,000) | 22,700 | |
| Plant and machinery (at cost) | 35,000 | |
| Motor vehicles (at cost) | 4,050 | |
| Accumulated depreciation (1 January 2021) | ||
| 7,680 | |
| 2,930 | |
| 950 | |
| Inventories (1 January 2021) | ||
| 3,280 | |
| 11,000 | |
| 50,000 | |
| Sales | 276,381 | |
| Purchases of raw materials | 166,101 | |
| Factory wages | 3,810 | |
| Office salaries | 1,250 | |
| Factory expenses | 13,490 | |
| Office expenses | 3,860 | |
| Allowance for doubtful debts | 380 | |
| Accounts receivable | 5,340 | |
| Accounts payable | 4,320 | |
| Bank | 240 | |
| 319,881 | 319,881 |
| 1. | Inventories as at 31 December 2021 were valued as follows: |
| 1. | Sh. “000” | |
| Raw materials | 3,560 | |
| Work-in progress | 18,400 | |
| Finished goods | 33,000 |
| 2. | The allowance for doubtful debts is to be maintained at 5% of the accounts receivable. |
| 3. | As at 31 December 2021, accrued factory expenses amounted to Sh.125,000 (including office expenses of Sh75,000) and prepaid factory expenses amounted to Sh.12,000 (including office rent and rates of Sh.7,000). |
| 4. | Depreciation is provided on cost as follows: | |
| Rate per annum | ||
| Factory buildings | 2% | |
| Factory plant | 20% | |
| Motor vehicles | 25% | |
| 5. | The inventory of finished goods of Tamu juice on 1 January 2021 was valued at factory cost. |
| 6. | The directors of Maji Matamu decided to transfer all the Tamu juice manufactured to the warehouse at a mark-up of 10% from 1 January 2021. |
| 7. | The directors proposed a dividend of Sh.10 per share issued. |
Required: | |
| (a) | Manufacturing and statement of profit or loss for the year ended 31 December 2021. |
| (b) | Statement of financial position as at 31 December 2021. |
| Trial Balance | |
| Sh."000" | |
| Issued and fully paid ordinary share capital (Sh. 10 par value) | 441,000 |
| General reserves (1 April 2015) | 429,200 |
| Retained profit (l April 201 5) | 140,000 |
| Production machinery (cost Sh.600 million) | 390,000 |
| Office equipment (cost Sh. 140 million) | 100,000 |
| Inventory(1st April 2015) | |
| Raw Materila | 46,000 |
| Finished goods | 667,000 |
| Work-in-progress | 33,000 |
| Sales | 2,400,000 |
| Trade receivables | 691,000 |
| Trade payables | 497,000 |
| Carriage outwards | 124,000 |
| Factory wages | 333,000 |
| Carriage on raw materials | 39,400 |
| Purchases of raw materials | 400,000 |
| General factory expenses | 66,000 |
| Lighting expenses | 72,000 |
| Factory power | 118,000 |
| Administrative salaries | 270,000 |
| Sales agents' salaries | 80,000 |
| Commission to sales agents | 19,000 |
| Rent | 120,000 |
| Insurance expenses | 132,000 |
| General administrative expenses | 144,000 |
| Bank overdraft | 26,800 |
| Cash in hand | 15,000 |
| Bank charges | 9,600 |
| Discounts allowed | 28,000 |
| Royalties | 37,000 |
| Sh."000" | |
| Raw materials | 60,000 |
| Work-in-progress | 25,000 |
| Production machinery | 10% per annum on cost |
| Office equipment | 10% per annum on reducing balance |