Bidii Ltd. Is in business of manufacturing gas cylinders. The following balances were extracted from the books of the company as at 31st March 2016.
Sh ‘000’
Issued and fully paid ordinary share capital
441 000
General reserves (1 April 2015)
429 200
Retained profit (1 April 2015)
140 000
Production machinery (cost sh. 600 million)
390 000
Office equipment (cost sh. 140 million)
100 000
Inventory:(1 April 2015)
Raw materials
46 000
Finished goods
667 000
Work in progress
33 000
Sales
2 400 000
Trade receivables
691 000
Trade payables
497 000
Carriage outwards
124 000
Factory wages
333 000
Carriage on raw materials
39 400
Purchases of raw materials
400 000
General factory expenses
66 000
Lighting expenses
72 000
Factory power
118 000
Administrative salaries
270 000
Sales agents salaries
80 000
Commission to sales agents
19 000
Rent
120 000
Insurance expenses
132 000
General administrative expense
144 000
Bank overdraft
26 800
Cash in hand
15 000
Bank charges
9 600
Discount allowed
28 000
Royalties
37 000
Additional information
1. Inventory as at 31st march 2016 was made up of the following
· Raw materials sh. 60 000 000
· Work in progress sh. 25 000 000
2. The finished goods were sold at a markup of 66 2/3 %
3. Lighting expenses, rent and insurance expenses are to be apportioned as follows; factory 70% and administration 30 %
4. Depreciation is to be provided as follows;
· Production machinery – 10% per annum on cost
· Office equipment – 10% per annum on reducing balance.
5. Sales agents salaries include sh.35 000 000 that relates to the 7 months ending 31st may 2016
6. The directors have proposed the following:
· Sh. 100 million to be transferred to general reserves
· Dividend of sh. 0.8 per share to be paid to ordinary shareholders
7. Factory wages included sh. 143 million for indirect labour
Required;
a) manufacturing account and income statement for the year ended 31st march 2016 (10 marks)
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