Muthokiju and Sons Ltd is a small manufacturing firm owned by members of the family. The following trial balance was extracted from the books of the company as at 31 March 2020: Freehold property, at cost (land Sh. 75,000) Plant, at cost Depreciation Motor vehicle, at cost Depreciation – motor vehicle Fittings and fixtures, at cost Depreciation – fittings and fixtures 20,000 Ordinary shares of Sh. 10 each authorized, issued and fully paid Share premium General reserve Interim dividend paid Cash at bank and in hand Accounts receivable and payable 15% Debentures Discount received Profit and loss account 1 April 2019 Purchases of raw materials Sales of finished goods Inventories 1 April 2019: Raw materials Work in progress Finished goods Provision for doubtful debts Bad debts Rates and insurance Wages Factory power Light and water Plant maintenance Salaries Returns of raw material Sales returns Advertising Transport expenses (Sales department) Bank charges General expenses Sh. 125,000 130,000 53,000 38,600 16,000 33,570 130,540 942,380 33,060 57,660 107,860 4,890 9,430 108,370 22,560 16,280 10,970 90,000 1,360 8,580 24,320 3,040 36,160 2,003,630 Sh. 62,000 30,500 11,790 200,000 50,000 120,000 57,430 100,000 3,640 103,870 1,254,760 6,400 3,240 2,003,630 Additional information: Depreciation is to be provided for the year using the reducing balance method and applying rates of 15% on plant, 25% on motor vehicle and 10% on fittings and fixtures. Building is to be depreciated at the rate of 4% using the straight-line method. (Assume the whole building is used for manufacturing purposes). Provision for doubtful debts is to be adjusted to a figure equal to 10% of accounts receivable. Light and water, insurance and general expenses are to be apportioned in the ratio 4:1 between factory and administrative overheads as at 31 March 2020. Electricity and water accrued was Insurance prepaid was Rates prepaid were Inventories were valued at: Raw materials Work in progress Finished goods 860 270 780 139,630 82,450 124,320 Debenture interest has not yet been paid. The directors require provision for a final dividend which will bring the dividend for the year up to Sh. 2 per share. Required: Prepare a Manufacturing and income statement account for the year ended 31 March 2020 and a statement of financial position. MUTHOKIJU AND SONS LTD MANUFACTURING ACCOUNT AND INCOME STATEMENT FOR THE YEAR ENDED 31 MARCH 2020 Raw materials: Opening stocks Answer Purchases Answer Less Returns In. Answer Less Closing stocks Answer Prime Costs Answer Factory Overheads: Plant depreciation Answer Building depreciation Answer Rates and Insurance Answer Factory power Answer Light and power Answer Plant maintenance Answer General expenses Answer Answer Answer Opening W.I.P. Answer Less: Closing W.I.P. Answer Answer Goods manufactured 902854 Sales 1254760 Less: Sales Returns Answer Net Sales Answer Opening stock Answer Finished Goods manufactured Answer Less: Closing stocks Answer Answer Total Gross Profit Answer Discount received Answer Total gross Incomes Answer LESS: EXPENSES Debenture interest Answer Provision for bad debts Answer Depreciation - Motor vehicle Answer - Fittings and fixtures Answer Dividend - Interim Answer - Final Answer Answer Retained Profit for the year Answer Retained Profit brought forward Answer Retained Profit carried forward Answer MUTHOKIJU AND SONS LTD STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2020 NON-CURRENT ASSETS At Cost Accumulated Depreciation Net Book Value Freehold property Answer Answer Answer Plant Answer Answer Answer Motor vehicle Answer Answer Answer Fittings and fixtures Answer Answer Answer Answer Answer Answer CURRENT ASSETS Stocks - Raw materials Answer - work in progress Answer - Finished goods Answer Answer Debtors, less provisions Answer Cash at bank and in hand Answer Prepaid expenses Answer Answer CURRENT LIABILITIES Creditors Answer Accruals Answer Dividend proposed Answer Answer Answer Answer FINANCED BY: Authorized, and issued share capital: 20,000 Ordinary shares each Sh. 10 Answer Reserves: - Share Premium Answer - General Reserve Answer - Net profit Answer Answer NON-CURRENT LIABLITIES 15% debentures Answer Answer Answer
Muthokiju and Sons Ltd is a small manufacturing firm owned by members of the family. The following
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Freehold property, at cost (land Sh. 75,000) Plant, at cost Depreciation Motor vehicle, at cost Depreciation – motor vehicle Fittings and fixtures, at cost Depreciation – fittings and fixtures 20,000 Ordinary shares of Sh. 10 each authorized, issued and fully paid Share premium General reserve Interim dividend paid Cash at bank and in hand Accounts receivable and payable 15% Debentures Discount received Purchases of raw materials Sales of finished goods Inventories 1 April 2019: Raw materials Work in progress Finished goods Provision for doubtful Bad debts Rates and insurance Wages Factory power Light and water Plant maintenance Salaries Returns of raw material Sales returns Advertising Transport expenses (Sales department) Bank charges General expenses
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Sh. 125,000 130,000
53,000
38,600
16,000 33,570 130,540
942,380
33,060 57,660 107,860
4,890 9,430 108,370 22,560 16,280 10,970 90,000
1,360 8,580 24,320 3,040 36,160 2,003,630 |
Sh.
62,000
30,500
11,790
200,000 50,000 120,000
57,430 100,000 3,640 103,870
1,254,760
6,400
3,240
2,003,630 |
Additional information:
- Depreciation is to be provided for the year using the
reducing balance method and applying rates of 15% on plant, 25% on motor vehicle and 10% on fittings and fixtures. - Building is to be
depreciated at the rate of 4% using the straight-line method. (Assume the whole building is used for manufacturing purposes). - Provision for doubtful debts is to be adjusted to a figure equal to 10% of accounts receivable.
- Light and water, insurance and general expenses are to be apportioned in the ratio 4:1 between factory and administrative
overheads as at 31 March 2020.
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Electricity and water accrued was Insurance prepaid was Rates prepaid were Inventories were valued at: Raw materials Work in progress Finished goods |
860 270 780
139,630 82,450 124,320 |
- Debenture interest has not yet been paid.
- The directors require provision for a final dividend which will bring the dividend for the year up to Sh. 2 per share.
Required: Prepare a Manufacturing and income statement account for the year ended 31 March 2020 and a
MUTHOKIJU AND SONS LTDMANUFACTURING ACCOUNT AND INCOME STATEMENT FOR THE YEAR ENDED 31 MARCH 2020 |
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Raw materials: |
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Opening stocks |
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Answer |
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Purchases |
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Answer |
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Less Returns In. |
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Answer |
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Less Closing stocks |
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Answer |
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Prime Costs |
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Answer |
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Factory Overheads: |
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Plant depreciation |
Answer |
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Building depreciation |
Answer |
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Rates and Insurance |
Answer |
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Factory power |
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Light and power |
Answer |
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Plant maintenance |
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General expenses |
Answer |
Answer |
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Opening W.I.P. |
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Less: Closing W.I.P. |
Answer |
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Goods manufactured |
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902854 |
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Sales |
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1254760 |
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Less: Sales Returns |
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Net Sales |
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Opening stock |
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Finished Goods manufactured |
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Less: Closing stocks |
Answer |
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Total Gross Profit |
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Answer |
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Discount received |
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Answer |
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Total gross Incomes |
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LESS: EXPENSES |
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Debenture interest |
Answer |
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Provision for bad debts |
Answer |
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Depreciation |
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- Motor vehicle |
Answer |
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- Fittings and fixtures |
Answer |
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Dividend |
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- Interim |
Answer |
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- Final |
Answer |
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Retained Profit for the year |
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Answer |
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Retained Profit brought forward |
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Answer |
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Retained Profit carried forward |
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Answer |
MUTHOKIJU AND SONS LTDSTATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2020 |
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NON-CURRENT ASSETS |
At Cost |
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Net Book Value |
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Freehold property |
Answer |
Answer |
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Plant |
Answer |
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Motor vehicle |
Answer |
Answer |
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Fittings and fixtures |
Answer |
Answer |
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Answer |
Answer |
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CURRENT ASSETS |
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Stocks |
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- Raw materials |
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- work in progress |
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- Finished goods |
Answer |
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Debtors, less provisions |
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Cash at bank and in hand |
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Answer |
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Prepaid expenses |
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Answer |
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CURRENT LIABILITIES |
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Creditors |
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Answer |
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Accruals |
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Dividend proposed |
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Answer |
Answer |
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Answer |
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Answer |
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FINANCED BY: |
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Authorized, and issued share capital: |
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20,000 Ordinary shares each Sh. 10 |
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Reserves: |
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- Share Premium |
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- General Reserve |
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- Net profit |
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NON-CURRENT LIABLITIES |
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15% debentures |
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Answer |
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