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