Question

4. The following balances were extracted from the tria balance of Takan ltd manufacturing company as at 31 Dec 2013

Ksh ‘000’
1 January 2012: raw materials 8,000
Work in progress 3,500
Finished goods 3,500
31 December 2013 raw material 10,500
Work in progress 4,200
Finished goods 44,000
Wages 39,000
Factory salaries 25,000
Purchases of raw materials 87,000
Fuel and power 9,900
Direct expenses 1,400
Lubricants 3,000
Carriage inwards 2,000
Factory rent 7,200
Office rent 2,000
Depreciation on factory plant 4,200
Factory transport expenses 1,800
Insurance of factory building and plant 1,500
General factory expenses 3,300
Sales of finished goods 250,000
Advertising costs 2,000

Required;
Manufacturing trading and profit and loss account. (20 Marks)

5. The following balance remained in the books of Ahadi ltd as at 30 April 2003 after the preparation of the trading account

Sh
Share capital authorized and issued
2,400,000 sh 20 ordinary share 48,000,000
800,000 85 sh 20 preference share16,000,000
Stock 30 April 2003 33,540,000
Account receivable and prepayments 10,880,000
Account payable and accruals 5,488,800
Balance at bank 3,118,400
10% debentures 6,400,000
General reserves 11,200,000
Bad debts 136,000
Gross profit for the year 32,603,200
Salaries and wages 11,280,000
Rates and insurance 564,000
Postage and telephone 248,000
Water and electricity 486,400
Debenture interest 320,000
Directors fees 1,000,000
General expenses 1,243,000
Motor vehicles (cost sh 11,640,000) 2,726,000
Office fittings and equipment (cost sh 17,856,000)10,976,000
Land and building at cost 52,880,000
Profit and loss account - 1 may 2002 9,700,800

Additional information
a) A bill for sh 219,200 in respect of electricity for the period up to 30 April 2003 has not been accrued
b) The amount of insurance includes a premium of sh 120,000 paid in January 2003 to cover the company for six months, February to July 2003.

c) Office fittings and equipment are to be depreciated at 15% per annum
    on cost and motor vehicles at 20% per annum on cost.

d) Provision is to be made for:
Directors fees sh 2,000,000
Audit fee sh 480,000
   the outstanding debenture interest

e) The directors have recommended that:
• A sum of sh 4,800,000 be transferred to general reserves.
• The preference dividend be paid
• A 10% ordinary dividend be paid
         Required:

          a) Profit and loss and appropriate accounts for the year ended 30 April
              2003. (12 Marks)

          b) Balance sheet as at 30 April 2003.

Answer 1

Takan Manufacturing
Manufacturing trading and profit and loss account.
For year ended December 31, 2012
Direct materials:
Opening stock of raw materials	8,000.00
Purchases of raw materials	87,000.00
Carriage inwards	2,000.00
Cost of raw materials available for use	97,000.00
Less: closing stock of raw materials	(10,500.00)
Raw materials consumed (1)		86,500.00
Direct wages	39,000.00
Direct expenses	1,400.00	40,400.00
Prime cost (2)		126,900.00
Factory overheads:
Factory salaries	25,000.00
Fuel and power	9,900.00
Lubricants	3,000.00
Factory rent	7,200.00
Depreciation on factory plant	4,200.00
Factory transport expenses	1,800.00
Insurance of factory building and plant	1,500.00
General factory expenses	3,300.00
Total Factory overheads	55,900.00
Add: Opening Stock of Work in Progress	3,500.00
Less: Closing Stock of Work in Progress	(4,200.00)
Factory Cost  (3)		182,100.00
Add: Office Administrative Overheads
Office Rent		2,000.00
Total Cost of Production (4)		184,100.00
Add: Opening Stock of Finished Good		3,500.00
Lesss: Closing  Stock of Finished Good		(44,000.00)
Cost of good sold (5)		143,600.00
Add: Selling and Distribution Overheads
Advertising costs		2,000.00
Cost of Sales (6)		145,600.00
Profit (7)		104,400.00
Sales		250,000.00