Unit: Financial accounting
11 Questions| 2021 Sh.“000” | 2022 Sh.“000” | 2023 Sh.“000” | 2024 Sh.“000” | |
| Plant at cost | 80,000 | 80,000 | 90,000 | ? |
| Accumulated depreciation | (16,000) | (28,800) | (36,700) | ? |
| Net book value (NBV) | 64,000 | 51,200 | 53,300 | ? |
| 1. | Disposals took place as follows:
|
| 2. | Acquisition of plant:
|
| 3. | Depreciation is provided at the rate of 20% per annum on reducing balance. |
Required: | |
| (i) | Extract of the plant movement schedule for the years ended 2021, 2022, 2023 and 2024. |
| (ii) | Disposal accounts for Plant W and Plant X. |
| Receipts: | Sh.“000” | Sh.“000” | |
| Balance as at 1 January 2024 | 786 | ||
| Subscription received for: | 2023 | 2,100 | |
| 2024 | 21,525 | ||
| 2025 | 1,800 | ||
| Restaurant sales | 91,920 | ||
| Donation received | 1,200 | ||
| 119,331 | |||
| Payments: | |||
| Payment for restaurant supplies | 57,930 | ||
| Groundsmen wages | 29,908 | ||
| Restaurant staff wages | 12,936 | ||
| Restaurant expenses | 351 | ||
| Repair to stands and pavilion | 1,110 | ||
| Gym rent and upkeep | 2,744 | ||
| Management expenses | 1,407 | ||
| Transport costs | 3,630 | 110,016 | |
| Balance as at 31 December 2024 | 9,315 | ||
| 1. | The following balances were available as at 31 December: | ||
| 2023 Sh.“000” | 2024 Sh.“000” | ||
| Inventory in the restaurant | 6,744 | 8,337 | |
| Owing for restaurant supplies | 4,941 | 6,510 | |
| Accrued restaurant expenses | 338 | 504 | |
| Transport cost accrued | - | 398 | |
| 2. | The gym equipment as at 31 December 2023 was valued at Sh.3,750,000 and is to be depreciated at the rate of 20% per annum. |
| 3. | Subscriptions owing by members amounted to Sh.2,100,000 on 31 December 2023 and Sh.2,625,000 on 31 December 2024. |
| 4. | As at 31 December 2023, land was valued at Sh.60 million and the pavilion at Sh.30 million. The pavilion was depreciated at the rate of 10% per annum on cost. |
Required: | |
| (i) | Restaurant statement of profit or loss for the year ended 31 December 2024. |
| (ii) | Restaurant income and expenditure account for the year ended 31 December 2024. |
| Sh. | Sh. | ||
| Capital account: | |||
| Oliver | 7,840,000 | ||
| Karen | 6,552,000 | ||
| Current account: | |||
| Oliver | 840,000 | ||
| Karen | 952,000 | ||
| Amount paid in by Michael | 2,352,000 | ||
| Sales | 69,440,000 | ||
| Purchases | 53,760,000 | ||
| Wages and salaries | 2,397,200 | ||
| General expenses | 2,520,000 | ||
| Plant and machinery | 14,064,000 | ||
| Motor vehicles | 3,684,800 | ||
| Furniture and fittings | 2,500,000 | ||
| Trade receivables | 5,040,000 | ||
| Trade payables | 2,853,200 | ||
| Allowance for depreciation: | |||
| Plant and machinery | 1,344,000 | ||
| Motor vehicles | 1,052,800 | ||
| Furniture and fittings | 260,000 | ||
| Inventory (1 April 2024) | 4,480,000 | ||
| Allowance for credit loss | 392,000 | ||
| Cash in hand | 448,000 | ||
| Cash in bank | 4,984,000 | ||
| 93,878,000 | 93,878,000 | ||
| 1. | On 1 April 2024, Michael was admitted into the partnership under the following terms:
|
| 2. | The actual balance at bank on 31 March 2025 was Sh.1,512,000, the difference being drawings as follows:
|
| 3. | As at 31 March 2025, inventory was valued at Sh.6,300,000. |
| 4. | Depreciation is provided on cost as follows: | |
| Rate per annum | ||
| Plant and machinery | 15% | |
| Motor vehicles | 25% | |
| Furniture and fitting | 12½% | |
| 5. | Allowance for credit loss is maintained at 5% of trade receivables. |
Required: | |
| (a) | Partners statement of profit or loss for the year ended 31 March 2025. |
| (b) | Partners current accounts. |
| (c) | Statement of financial position as at 31 March 2025. |
| Sh. | Sh. | |
| Retained earnings as at 1 January 2024 | 478,534 | |
| Buildings at cost (1 January 2019) | 2,242,500 | |
| Equipment at cost (1 January 2019) | 864,050 | |
| Sales | 7,542,520 | |
| Purchases | 4,875,260 | |
| Accounts receivables | 345,875 | |
| Accounts payables | 248,750 | |
| Other receivables | 40,000 | |
| Motor vehicles at cost | 468,500 | |
| 10% debentures | 1,457,500 | |
| Ordinary share capital | 180,000 | |
| Investment income | 4,000 | |
| Investment property (4% interest rate) | 200,000 | |
| Inventory (1 January 2019) | 284,650 | |
| Income tax expense | 163,000 | |
| Finance cost | 10,000 | |
| Distribution cost | 812,720 | |
| Tax payable account | 36,000 | |
| Bank | 394,600 | |
| Allowance for credit loss | 12,601 | |
| Administrative expenses | 248,750 | |
| Allowance for depreciation: | ||
| Buildings | 580,000 | |
| Equipment | 220,000 | |
| Motor vehicles | 190,000 | |
| 10,949,905 | 10,949,905 |
| 1. | Rhino Ltd. held an inventory count at the year end which revealed that the year end inventories at cost amounted to Sh.268,460,000. Included in this figure is Sh.3,200,000 of slow moving inventories at cost. These will need to be sold at a 40% discount on selling price in order to sell them. Rhino sells these goods at a mark up of 20%. |
| 2. | Equipment costing Sh.150,000,000 was acquired on credit from Tausi Traders. This had not been recorded in the books. |
| 3. | A building was disposed of for Sh.140,000,000 on 31 October 2024. This building had been purchased 8 years ago for Sh.200,000,000. |
| 4. | Depreciation is provided per annum as follows: | |
| Buildings | - 5% on cost | |
| Equipment | - 10% on reducing balance | |
| Motor vehicles | - 25% on reducing balance | |
| 5. | At the year end, the directors declared dividends of Sh.40,000,000 for the year ended 31 December 2024. This had been treated as shown below in the financial statements: |
| 5. | Debit : | Other receivables | Sh.40,000,000 | |
| Credit : | Retained profits | Sh.40,000,000 |
| 6. | 80% of credit loss of Sh.6,000,000 that had been written off to administrative expenses were found to be recoverable in the year ended 31 December 2024. |
| 7. | The company’s policy is to provide for allowance for credit loss at a rate of 4%. |
Required: | |
| (i) | Statement of profit or loss for the year ended 31 December 2024. |
| (ii) | Statement of financial position as at 31 December 2024. |
| 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. |
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