Unit: Financial accounting
12 Questions| Sh.“000” | ||||
| Land at cost | 2,400 | |||
| Building at cost | 6,400 | |||
| Equipment at cost | 960 | |||
| Accumulated depreciation 1 July 2023 | Building | 480 | ||
| Equipment | 220 | |||
| Trade receivables | 1,368 | |||
| Trade payables | 1,624 | |||
| Allowance for doubtful debts (1 July 2023) | 42 | |||
| Cash at bank | 84 | |||
| Capital account (1 July 2023) | Ann | 3,600 | (Credit) | |
| Ben | 3,400 | (Credit) | ||
| Chad | 3,200 | (Credit) | ||
| Current account (1 July 2023) | Ann | 60 | (Credit) | |
| Ben | 40 | (Debit) | ||
| Chad | 40 | (Credit) | ||
| Purchases | 5,820 | |||
| Sales | 9,880 | |||
| Staff salaries and wages | 1,172 | |||
| Rent and rates | 500 | |||
| General administrative expenses | 284 | |||
| Bad debts written off | 18 | |||
| 1. | Inventory was valued at Sh.1,620,000 and Sh.1,800,000 as at 1 July 2023 and 30 June 2024 respectively. |
| 2. | As at 30 June 2024, rent and rates paid in advance amounted to Sh.100,000. |
| 3. | As at 30 June 2024, general administrative expenses accruing amounted to Sh.88,000. |
| 4. | The partners made the following drawings during the year ended 30 June 2024: |
| Partner | Date | Amount Sh.“000” | |
| Ann | 31 December 2023 | 420 | |
| Ben | 30 June 2024 | 740 | |
| Chad | 30 June 2024 | 720 | |
| 5. | Depreciation is to be provided on a straight line basis as follows: | ||
| Asset | Rate per annum | ||
| Building | 2% | ||
| Equipment | 15% | ||
| 6. | Allowance for doubtful debt to be increased to Sh.48,000. |
| 7. | Balance due to Ann was to remain in partnership carrying no interest until 1 July 2024. |
| 8. | The value of partnership goodwill as at 31 December 2023 was agreed by the three partners at Sh.4,000,000 and was not to remain in the books of the partnership. |
| 9. | On 31 December 2023, the partners agreed to revalue the land upwards to Sh.3,200,000. |
| 10. | Assume profits accrued evenly throughout the year. |
Required: | |
| (a) | Statement of profit or loss and appropriation account for the year ended 30 June 2024. |
| (b) | Statement of financial position as at 30 June 2024. |
| Roka Ltd. Statement of profit or loss for the year ended 31 August 2024: | ||
| Sh. | Sh. | |
| Sales | 14,963,130 | |
| Cost of sales | (7,707,050) | |
| 7,256,080 | ||
| Investment income | 29,484 | |
| 7,285,564 | ||
| Expenses: | ||
| Distribution cost | 2,552,784 | |
| Administration cost | 1,772,576 | (4,325,360) |
| Net profit before tax and finance cost | 2,960,204 | |
| Finance cost | (410,800) | |
| Net profit before tax | 2,549,404 | |
| Corporation tax | (820,924) | |
| Net profit for the year | 1,728,480 | |
| Retained earnings brought forward | 8,658,000 | |
| Retained earnings carried forward | 10,386,480 | |
| Roka Ltd Statement of financial position as at 31 August: | ||
| 2024 Sh. | 2023 Sh. | |
| Non-current assets | 33,930,702 | 27,833,208 |
| Accumulated depreciation | (7,695,142) | (6,607,874) |
| 26,235,560 | 21,225,334 | |
| Current assets: | ||
| Inventory | 8,582,288 | 7,573,696 |
| Trade receivables | 3,231,150 | 4,504,864 |
| Bank | 309,192 | 278,408 |
| 12,122,630 | 12,356,968 | |
| Total assets | 38,358,190 | 33,582,302 |
| Capital and liabilities: | ||
| Ordinary share capital | 10,920,000 | 7,800,000 |
| Share premium | 4,103,840 | 4,038,814 |
| Revaluation reserve | 3,876,080 | 2,127,840 |
| Retained earnings | 10,386,480 | 8,658,000 |
| 29,286,400 | 22,624,654 | |
| Non-current liabilities: | ||
| 12% debentures | 3,501,680 | 4,589,000 |
| Current liabilities: | ||
| Trade payables | 4,942,860 | 5,694,624 |
| Corporation tax | 627,250 | 674,024 |
| 5,570,110 | 6,368,648 | |
| Total capital and liabilities | 38,358,190 | 33,582,302 |
| Sh. | Sh. | |
| Capital (1 October 2023) | 4,748,430 | |
| Purchases | 1,385,400 | |
| Sales | 2,952,240 | |
| Returns outward | 8,400 | |
| Returns inward | 24,240 | |
| Discount allowed | 27,300 | |
| Discount received | 21,120 | |
| Wages and salaries | 933,000 | |
| Rates | 73,500 | |
| Insurance | 53,400 | |
| General expenses | 121,800 | |
| Trade receivables | 552,000 | |
| Trade payables | 483,600 | |
| Bank overdraft | 120,600 | |
| Inventory (1 October 2023) | 183,000 | |
| Land and buildings | 2,550,000 | |
| Plant and machinery | 1,600,000 | |
| Motor vehicles | 843,000 | |
| Drawings | 312,300 | |
| Furniture and fittings | 245,000 | |
| Cash | 60,300 | |
| Accumulated depreciation: | ||
| Plant and machinery | 447,010 | |
| Motor vehicles | 168,600 | |
| Furniture and fittings | 14,240 | |
| 8,964,240 | 8,964,240 |
| 1. | As at 30 September 2024, inventory was valued at Sh.222,600. |
| 2. | As at 30 September 2024, rates paid in advanced amounted to Sh.10,500. |
| 3. | As at 30 September 2024, outstanding electricity expenses amounted to Sh.5,370. This is included in general expenses. |
| 4. | Trade receivables include an irrecoverable amount of Sh.8,400. |
| 5. | A 5% allowance for doubtful debt is to be made on the remaining trade receivables. |
| 6. | Depreciation is provided at the following annual rates using the straight line method:
|
| 7. | Included in wages and salaries is an amount of Sh.93,000 paid to the domestic workers of Bella Omari. |
| 8. | As at 30 September 2024, outstanding wages and salaries amounted to Sh.37,200. |
Required: | |
| (a) | Statement of profit or loss for the year ended 30 September 2024. |
| (b) | Statement of financial position as at 30 September 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. |
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