Prepare a statement of financial position, Financial Accounting

SECTION A

QUESTION 1:

Below is a trial balance of a manufacturer of boots for the local market. Trial balance as at 31st December 2012


Dr Rs

Cr Rs

Sales


8,80,875

Inventory at  1st January 2012



Raw Materials

15,000


Work in Progress

25,000


Finished Goods

35,000


Purchase of Raw Materials

2,10,000


Returns - Raw Materials


15,000

Direct Wages

2,00,000


Indirect Wages

25,000


Rent and Rates

60,000


Lighting

15,000


Insurance

16,000


Office Salaries

52,000


Carriage Inwards - Raw Materials

16,200


Carriage Outwards

5,500


Travelling Expenses - Office Staff

8,000


Discount Allowed

4,000


Royalties

2,000


Telephone

15,000


Loan from National Commercial Bank  (10%)


60,000

Receivables

14,200


Payables


15,500

Cash

200


Drawings

5,000


Bank

8,500


Factory Machines ( at cost)

1,50,000


Office Equipment ( at cost )

75,000


Motor Vans (at cost)

1,00,000


Land and Buildings (at cost)

2,00,000


Accumulated Depreciation - 1st January 2012



Factory Machines


45,000

Office Equipment


27,000

Motor Vans


60,000

Capital


2,38,000

Indirect Materials

7,500


Factory Power

24,000


Commission on Sales

5,000


Salesmen Commission

36,000


General Expenses

12,000


Financial Charges

500


Provision for Doubtful Debts


225




----------

-----------


13,41,600

13,41,600


======

======

Additional information:

1.   Inventory at 31st December 2012:

Raw Materials Rs20,000; Work in Progress Rs25,000; Finished Goods Rs40,000.

2.   Rent was prepaid by Rs.4,000 and Rates outstanding by Rs2,000.

3.   Factory Power not yet paid at 31st December 2012 amounted to Rs5,000.

4.   The provision for doubtful debts to be set to 2% of receivables.

5.   The Loan was contracted on 1st  January 2012 .The Loan is repayable in five equal annual instalments with effect from 1st April 2013. The loan interest should be accrued.

6.   Depreciation policy:

Factory Machines - 10  % p.a Straight Line basis; Office Equipment -  20  % Reducing Balance basis; Motor Vans - 15 % on cost; Land and Buildings - Nil

The motor van is used for delivery purposes.

7.   Expenses are to be apportioned as follows:

Insurance

Factory 3/5

Office 2/5

Rent and Rates

70%

30%

Lighting

01-Apr

03-Apr

General expenses

40%

60%

Required:

(i)    Prepare Manufacturing, Trading and Profit and Loss accounts for the year ended 31st December 2012

(ii)   Prepare a Statement of financial position as at 31st December 2012

Posted Date: 10/18/2013 5:14:40 AM | Location : United States







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