MOUNT KENYA UNIVERSITY

IDRIS ABDI BILAL

BDS/2014/79336

BAF1201 CAT ONE

B kinuthia spikes Trial Balance as on 31 December 2014 Dr Cr Stock of raw materials 1.1.2013 21,000 Stock of finished goods 1.1.2013 38,900 Work in progress 1.1.2013 13,500 Wages(direct 180,000: factory 325,000 indirect145,000) Royalties 7,000 Carriage inwards (on raw materials) 3,500 Purchases of raw materials 370,000 Productive machinery (cost Kshs. 280,000) 230,000 Accounting machinery (cost Kshs. 20,000) 12,000 General factory expenses 31,000 Lighting 7,500 Factory power 13,700 Administrative salaries 44,000 Sales representatives salaries 30,000 Commission on sales 11,500 Rent 12,000 Insurance 4,200 General administration expenses 13,400 Bank charges 2,300 Discounts allowed 4,800 Carriage outwards 5,900 Sales 1000,000 Debtors and creditors 142,300 125,000 Bank 56,800 Cash 1,500 Drawings 20,000 Capital as at 1.1.2013 29,680 Notes at 31.12.2013

1. Stock of raw materials Kshs. 24,000, stock of finished goods Kshs. 40,000, work in progress Kshs. 15,000. 2. Lighting, and rent and insurance are to be apportioned: factory 5/6ths, administration 1/6th. 3. Depreciation on productive and accounting machinery at 10 per cent per annum on cost. Required: Prepare a manufacturing, Trading Profit and Loss Account for the year ended 31 December 2014

ANSWER

B KINUTHIA SPIKES Manufacturing, Trading Profit and Loss Account for the year ended 31 December

2014 Particulars Ksh. Ksh. Raw Materials Opening Stock 21,000 Purchases 370,000 Add: Carriage Inwards 3,500 373,500 394,500 Less: Raw Materials closing stock (24,000) Cost of Raw Materials used 370,500 Direct wages 180,000 Prime Cost 550,500 Factory Expenses Lighting (w1) 6,250 Rent (w2) 10,000 Insurance (w3) 3,500 Wages 145,000 Royalties 7,000 Depreciation: productive machinery 28,000 Factory expenses (General) 31,000 power 13,700 244,450 Total cost of production 794,950 Add: opening WIP 13,500 808,450 Less: closing WIP (15,000) Factory cost production per finished goods 793,450

Sales 1,000,000 Less cost of sales Opening stock of finished goods 38,900 Factory cost of production 793,450 832,350 Less closing stock of finished goods (40,000) 792,350 Gross profit 207,650 Expenses Accounting machinery depreciation 2,000 Lighting (w1) 1,250 Administrative salaries 44,000 Sales rep salaries 30,000 Sales commission 11,500 Rent (w2) 2,000 Insurance (w3) 700 General administrative expenses 13,400 Bank charges 2,300

Carriage outwards 5,900 Discounts allowed 4,800 (117,850) Net profit 89,800

Working 1 (w1) Lighting

Factory 5/6 * 7500 = 6,250

Expenses 1/6 * 7500 = 1,750

Working 1 (w2) Rent

Factory 5/6 * 12000 = 10,000

Expenses 1/6 * 12000 = 2,000

Working 1 (w3) Insurance

Factory 5/6 * 4,200 = 3,500

Expenses 1/6 * 4,200 = 700