Question

Q2. Manufacturing partnership business. Chacha and Mushi are in partnership sharing profits and losses equally. They are manufacturer of shoes whose brand name is "DAWO". The trial balance as at 31 December 2004 was as follows: Sh.'000 Sh.'000 Capital accounts: Chacha 4000 Mushi 4000

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solotion : Requirement Appropriation Ale @ Chacha and Mochi partnership Manufacturing and trading profit & Loss for the year ended 31 December and 2004 Shs Pooo shs 1000 shs 9000 Particulars Cost of Raw Materials: opening Stock purchases Add: carriage inwards 15oo 400D joo Hosoo 42000 (2000) consumed 40000 Less :- closing stock cost of raw materials Direct costs: Direct production wages 10000 F0000 480 1000 production overheads: factory manager's salary Factory rares e insurance (W) Deprecation : - Factory boildings (W2) - plant & Machinery (W3) 720 2200 2200 52200 2200 (4200) (2000) Work in progress opening closing Cost of goods manufactured Manufacturing profit (wy) Transfer price - 50200 12550 6225

96240 1 DO 62350 account Sales Less :- Caft af Sales & opening Stork Manufacturing Less: Closing Stock cost of Sales livoss profit Factory prohr 639 50 (1000) (62910) 23290 12150 35840 5000 1000 3250 490 Less: - Expenses : office Salaries Royoltes Distribution costs Rates & insurance (WI) fuel is electricity Bad debts Increase in provision for bad debre (W6) Deprecation: - Motor Vehicle (W7) provision for unseatised protit (ws) Net proft from dvading → Appropriations : Commissioni Moshi (1014 12550) Chacha (10.1.x24900) JJO 1 (11400) 24 900 1295 24१० 15ooo 4DO 400 partnership salary: Moshi Interest on capita : chacha Moshi share of protita chach a (1/2x5355) Much (12x5355) 267705 26775 24900

Current Account particulars chacha Muchi 100 Balance bid Drawings Chacha Muchi particulars Balance bid commission 200 Joo Interest on capital Salary (86705/189325 share of protit 500 2490 I 400 1400 19000 126775/267705 Balance old 16067.5 119732.5 6067019332.5

Requiement : Chacha y Holhi partnership Balance Sheet as at 31 Dec 2004 1000 S: 9000 Shs 000 SW particulars Assets : Non corrent assets : Land factory & building (100 (40+26) Delivery van (1400 - (350 + 700)) plant y Machinery (3500 - (1400 + 700)) Current Assets Stock i Raw Materials work in progress Finished goods Less:- Provision for onreatized protit 17000 940 310 1400 19690 -2000 4200 1000 (250) 750 900 (40) H60 • Debtors Less - provision for bad debts prepaid insurance Bank 235 6790 1433 34025 Exjoity and liabilities: capital & Reserves: capital : Chacha Moshi current accounts : chacha 4000 чроо 8000 5867.5 Moshi 18932.5 24800 current liabilities : exeditors Accrued rate 700 1925 RACER 34025

Workings: (w) Factory rates Less: prepaid & insurance 300 (200) Soo Addiouring Joo 1000 Depreciation on buildings & = 21-x (18000 – 17000) = 20 1) Depreciation on plant y Machinery: - 200 x 3500 = 700 profit - 25% x 56200 = 12550 = Shis 500 Rates Add & insurance Accrued less: – prepaid 490 ③ provision for bad debts: 5.1.x (800) = 40 Increase in provision - 40-20 20 expreaciation on Motor vehicles: = 25tX 1400 = 3.50 provision for unrealised Less :- Proht Already = 251 x 1000 - 250 provision 240 10 Increase in Provision→