QUESTION ONE
The following trial balance was extracted from the books of Regional Co. Ltd. as on 30 September 1995:
Sh. `000' Sh. `000'
Share capital, authorized and issued 3,125,000
Ordinary shares of Sh.20 each 62,500
Directors' current accounts
- Ombima 1,700
- Mwangi 975
Motor vehicles (cost Sh. 12 million) 7,200
Freehold properties, at cost 50,000
Profit and loss account
Balance at 1 October 1994 18,400
Purchases 228,440
Sales 296,000
Stock, 1 October 1994 26,875
Special loan from bank at 5% p. a. 12,500
Loan interest accrued at 30 September 1994 625
Goodwill 7,500
Bad debts 1,175
Provision for bad debts 30 September 1994 350
Rent receivable 625
Trade debtors and creditors 33,900 23,275
Motor vehicle running expenses 1,930
General expenses 10,825
Balance at bank 5,020
Salaries and wages 42,935
Rates and Insurance _1,150 _____
416,950 416,950
You are given the following information:
1. Stock in trade, 30 September 1995 was Sh.28, 875,000.
2. The provisions for bad debts is to be increased to Sh.750,000.
3. Salaries and .wages outstanding at 30 September 1995 is Sh.500,000.
4. Rates and insurance paid in advance at 30 September 1995 is Sh. 155,000.
5. The item 'rent receivable Sh.625,000 includes Sh. 125,000 in respect of the period from 1 October 1995 to 31 December 1995.
6. Provision is to be provided for depreciation of motor vehicles at the rate of 20 per cent per annum on cost.
7. During the year to 30 September 1995, Ombima, one of the directors took goods (cost Sh.437,500) out of business stock for his own use. No entry for this transaction has been made in the books.
Required:
(a)Trading and Profit and Loss Account for the year to 30 September 1995
(b) Balance Sheet as at that date.
QUESTION TWO
a. ABC Ltd. manufactures electric toys called Densta on small scale basis.
On 1 January 1997, 6000 units of Densta were in stock.
During 1997, the company manufactured 200,000 units and sold 190,000 units at a price of Sh.6 each.
The following balances were extracted from the books of account on 31 December 1997.
Stock of raw material 1.1.97 23,280
Stock of raw material 31.12.97 32,560
Purchase of raw material 269,000
Carriage on raw material 82,400
Direct wages 185,400
Factory expenses:
Rent and rates 76,800
Power 34,400
Insurance 31,280
Plant and machinery (Net of depreciation on 1.1.97) 300,000
The following additional information was available:
1. Stocks of work-in-progress on 1 January and 31 December 1997 were of insignificant value and are to be ignored.
2. Plant and machinery are to be depreciated using reducing balance method at 10%.
3. Finished units of Densta are valued at factory cost.
4. Factory cost per unit of Densta was the same in 1996 and 1997.
Required:
i. The manufacturing account for the year ended 31 December 1997, showing clearly the prime cost and factory costs of producing Densta.
ii. The trading account for the year ended 31 December 1997.
The following trial balance was extracted from the books of Regional Co. Ltd. as on 30 September 1995:
Sh. `000' Sh. `000'
Share capital, authorized and issued 3,125,000
Ordinary shares of Sh.20 each 62,500
Directors' current accounts
- Ombima 1,700
- Mwangi 975
Motor vehicles (cost Sh. 12 million) 7,200
Freehold properties, at cost 50,000
Profit and loss account
Balance at 1 October 1994 18,400
Purchases 228,440
Sales 296,000
Stock, 1 October 1994 26,875
Special loan from bank at 5% p. a. 12,500
Loan interest accrued at 30 September 1994 625
Goodwill 7,500
Bad debts 1,175
Provision for bad debts 30 September 1994 350
Rent receivable 625
Trade debtors and creditors 33,900 23,275
Motor vehicle running expenses 1,930
General expenses 10,825
Balance at bank 5,020
Salaries and wages 42,935
Rates and Insurance _1,150 _____
416,950 416,950
You are given the following information:
1. Stock in trade, 30 September 1995 was Sh.28, 875,000.
2. The provisions for bad debts is to be increased to Sh.750,000.
3. Salaries and .wages outstanding at 30 September 1995 is Sh.500,000.
4. Rates and insurance paid in advance at 30 September 1995 is Sh. 155,000.
5. The item 'rent receivable Sh.625,000 includes Sh. 125,000 in respect of the period from 1 October 1995 to 31 December 1995.
6. Provision is to be provided for depreciation of motor vehicles at the rate of 20 per cent per annum on cost.
7. During the year to 30 September 1995, Ombima, one of the directors took goods (cost Sh.437,500) out of business stock for his own use. No entry for this transaction has been made in the books.
Required:
(a)Trading and Profit and Loss Account for the year to 30 September 1995
(b) Balance Sheet as at that date.
QUESTION TWO
a. ABC Ltd. manufactures electric toys called Densta on small scale basis.
On 1 January 1997, 6000 units of Densta were in stock.
During 1997, the company manufactured 200,000 units and sold 190,000 units at a price of Sh.6 each.
The following balances were extracted from the books of account on 31 December 1997.
Stock of raw material 1.1.97 23,280
Stock of raw material 31.12.97 32,560
Purchase of raw material 269,000
Carriage on raw material 82,400
Direct wages 185,400
Factory expenses:
Rent and rates 76,800
Power 34,400
Insurance 31,280
Plant and machinery (Net of depreciation on 1.1.97) 300,000
The following additional information was available:
1. Stocks of work-in-progress on 1 January and 31 December 1997 were of insignificant value and are to be ignored.
2. Plant and machinery are to be depreciated using reducing balance method at 10%.
3. Finished units of Densta are valued at factory cost.
4. Factory cost per unit of Densta was the same in 1996 and 1997.
Required:
i. The manufacturing account for the year ended 31 December 1997, showing clearly the prime cost and factory costs of producing Densta.
ii. The trading account for the year ended 31 December 1997.
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