Unit: Financial accounting
9 Questions| Receipts: | Sh.“000” | |
| Capital introduced | - Melody | 7,000 |
| - Olivia | 4,000 | |
| Balance of cash received from customers | 25,400 | |
| Payments: | - Equipment | 5,000 |
| - Motor vehicle | 2,000 | |
| - Furniture and fittings | 750 | |
| Godown rent | 750 | |
| Wages | 3,544 | |
| Salary to sales team | 2,400 | |
| Purchase of inventory | 19,800 | |
| Rates | 400 | |
| Repairs and maintenance | 125 | |
| Insurance expenses | 110 | |
| Motor vehicle operating expenses | 373 | |
| Sh.“000” | ||
| Motor vehicle operating expenses | 258 | |
| Wages | 296 | |
| General administrative expenses | 50 | |
| Drawings | - Melody (per week) | 15 |
| - Olivia (per week) | 12 | |
| 1. | During the year ended 31 December 2023, discount allowed to customers amounted to Sh.245,000 while discounts received from suppliers amounted to Sh.110,000. |
| 2. | As at 31 December 2023, the amounts owing to suppliers amounted to Sh.1,500,000 and the amount owing by customers was Sh.3,100,000. An amount of Sh.400,000 owing by a customer was written off. |
| 3. | As at 31 December 2023, rates and insurance prepaid amounted to Sh.50,000 and Sh.10,000 respectively. |
| 4. | Inventory was valued at Sh.2,410,000 as at 31 December 2023. |
| 5. | The go-down had been occupied since 1 January 2023 at an annual rent of Sh.1,000,000. |
| 6. | Depreciation is provided on a straight-line basis as follows: | |
| Asset | Rate | |
| Motor vehicles | 20% per annum | |
| Equipment, furniture and fittings | 10% per annum | |
| 7. | The partners had taken goods for their domestic use as follows: | |
| Sh. | ||
| Melody | 100,000 | |
| Olivia | 150,000 | |
| Assume a 52-week year. | ||
| 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. |
| Equity and Liabilities: | 2023 | 2022 |
| Equity | Sh.“000” | Sh.“000” |
| Ordinary share capital | 900,000 | 600,000 |
| Share premium | 210,000 | 90,000 |
| Revenue reserves | 246,000 | 84,000 |
| Total equity and reserves | 1,356,000 | 774,000 |
| Non-current liabilities: | ||
| Debentures | 180,000 | 300,000 |
| Bank loan | - | 120,000 |
| Total long term liabilities | 180,000 | 420,000 |
| Current liabilities: | ||
| Trade payables | 288,000 | 204,000 |
| Proposed dividends | 90,000 | 45,000 |
| Corporate tax | 198,000 | 129,000 |
| Bank overdraft | - | 84,000 |
| 576,000 | 462,000 | |
| Total equity and liabilities | 2,112,000 | 1,656,000 |
| Non-current assets: | ||
| Freehold land (Net book value) | 780,000 | 660,000 |
| Plant and machinery (Net book value) | 582,000 | 450,000 |
| Furniture and fittings (Net book value) | 84,000 | 66,000 |
| 1,446,000 | 1,176,000 | |
| Current assets: | ||
| Inventory | 306,000 | 222,000 |
| Trade receivables | 264,000 | 256,800 |
| Short term investments | 27,600 | - |
| Cash in hand | 68,400 | 1,200 |
| 666,000 | 480,000 | |
| Total assets | 2,112,000 | 1,656,000 |
| 1. | A machinery with a net book value of Sh.12,000,000 (original cost Sh.48,000,000) was sold for Sh.18,000,000. Furniture with a net book value of Sh.18,000,000 (original cost Sh.30,000,000) was sold for Sh.13,000,000. Profits and losses on these transactions had been reported in the statement of profit or loss. |
| 2. | Corporate tax for the year ended 31 December 2023 was Sh.80,000,000. |
| 3. | The proposed dividends for the year ended 31 December 2022, were paid during the year ended 31 December 2023. |
| 4. | There was no disposal or revaluation of freehold property in the year ended 31 December 2023. |
| 5. | Interest expense charged to the statement of profit or loss for the year ended 31 December 2023 was Sh.38,400,000. Accrued interest of Sh.26,400,000 is included in the trade payables as at 31 December 2023. |
| 6. | Depreciation charged to the statement of profit or loss for the year ended 31 December 2023 was as follows: |
| 6. | Sh. | |
| Furniture and fixtures | 34,000,000 | |
| Plant and machinery | 58,000,000 |
| 1. | As at 1 April 2023, the club’s bank balance amounted to Sh.7,050,000. |
| 2. | During the year ended 31 March 2024, the amount of subscription received amounted to Sh.12,525,000 out of which there was Sh.325,000 represented subscription in arrears. Sh.11,400,000 represented subscription for the current year while Sh.225,000 was subscription received in advance. |
| 3. | The club received donations amounting to Sh.7,800,000 for repairing a roof that was leaking and Sh.12,250,000 for putting up a new building. |
| 4. | The 100,000 shares which the club acquired in Bidii Ltd. paid a dividend of Sh.3 per share. |
| 5. | Office furniture acquired during the year ended 31 March 2024 cost the club Sh.5,000,000. Half of the amount was paid and the balance is to be paid during the year ending 31 March 2025. |
| 6. | During the year ended 31 March 2024, the club started printing magazines for sale to the public. As at 31 March 2024, the club had printed 35,000 magazines at a cost of Sh.120 each and sold 32,500 magazines at a price of Sh.170 each. |
| 7. | Other payments made during the year ended 31 March 2024 include:
|
| Required: | |
| (i) | Subscriptions account for the year ended 31 March 2024. |
| (ii) | Receipts and payments account for the year ended 31 March 2024. |
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