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In: Accounting

Dr Cr Shs. Shs. Ordinary share capital (sh 20 each) 2500000 Inventories (1.12.2013) 250000 Plant and...

	Dr	Cr
	Shs.	Shs.
Ordinary share capital (sh 20 each)		2500000
Inventories (1.12.2013)	250000
Plant and Machinery (cost)	2500000
Motor vehicles (cost)	800000
Provision for depreciation of Plant and		200000
Machinery
Provision for depreciation of motor vehicles		160000
Purchases	3600000
Sales		6000000
Sales returns	400000
Purchases returns		200000
Wages and salaries	600000
Discounts	50000	40000
Discounts
Carriage inwards	25000
Carriage outwards	30000
Postage and telephone	75000
Water and electricity	86000
Bad debts written off	15000
Allowances for bad debts		10000
General expenses	85000
Rent and rates	150000
Debtors	550000
Creditors		466000
Cash in hand	60000
Cash at bank	300000
	9576000	9576000

You are given the following additional information:

(a) Closing stock on 30 Nov 2013 was valued at shs.225,000

(b) Depreciation is to be charged at 10% of cost of plant and machinery and 20% of cost of motor vehicles.

(c) Accrued rent of shs.30,000 and prepaid rates are shs.10,000.

(d) Outstanding electricity expenses is shs.6,000.

(e) Provision for bad debts is to be increased by shs.3,000.

Required:

Compile the financial statements

Expert Solution

1.

**Income Statement**
Sales (Net)	6000000-400000	5,600,000.00
COGS (note 1)		4,050,000.00
Gross Profit		1,550,000.00
Add: Other operating income
Discount received		40,000.00
		1,590,000.00
Less: Operating expenses:
Selling and distribution exp (note 2)		98,000.00
General and admin exp (note 3)		422,000.00
Depreciation Exp (note 4)		410,000.00

Net Income		660,000.00

2.

**Balance Sheet**
Assets
Plant and Machinery	2,500,000.00
Less: Provision for depn	(450,000.00)	2,050,000.00
Motor vehicles (cost)	800,000.00
Less: Provision for depn	(320,000.00)	480,000.00

Debtors	550,000.00
Less: Allowance for bad debts	(13,000.00)	537,000.00
Cash in hand		60,000.00
Cash at bank		300,000.00
Prepaid Rtes		10,000.00
Inventory		225,000.00
Total Assets		3,662,000.00

Liabilities and Equity
Liabilities:
Creditors		466,000.00
O/s Rent		30,000.00
O/s Electricity		6,000.00

Equities:
Ordinary share capital (sh 20 each)		2,500,000.00
Retained earnings		660,000.00
Total Liabilities and equity		3,662,000.00

Notes:

1. Cost of goods sold
Inventories (1.12.2013)	250,000.00
Purchases	3,600,000.00
Purchases returns	(200,000.00)
Carriage inwards	25,000.00
Wages and salaries	600,000.00
	4,275,000.00
Less: Closing Inventory (adj)	225,000.00
	4,050,000.00

2.

Selling and distn expenses
Discounts	50000
Bad bebts (15000+3000)	18000
Carriage outwards	30000
	98000

3.

**General and admin exp.**
Water and electricity (86000+6000)	92000
Rent and rates (150000+30000-10000)	170000
General expenses	85000
Postage and telephone	75000
	422000

4.

**Depreciation**
Pland and machinery	2500000*10%	160,000.00
Motor vehicles	800000*20%	410,000.00

ekkarill92 answered 1 year ago

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