ABC Ltd prepares its financial statements to 31 October each year. Its trial balance at 31...

 

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ABC Ltd prepares its financial statements to 31 October each year. Its trial balance at 31 October 2019 was as follows: Premises-cost Manufacturing plant-cost Office equipment-cost Accumulated depreciation at 1 November 2018 Inventories at 1 November 2018 Raw materials Work in progress Finished goods Premises Manufacturing plant Office equipment Sales of finished goods Purchases of raw materials Returns inwards and outwards Direct wages Heat, light and power Salaries Printing, postage and stationery Rent and insurances Loan interest paid Loan Trade receivables and payables Allowance for receivables Sales tax account Dividend paid Ordinary shares of K1 each Share premium account Retained earnings Bank balance (H) (ii) Prepayments Rent Insurance Accruals K'000 600 350 125 Direct wages Salaries 27 18 255 826 38 575 242 122 32 114 12 287 10 4,142 The following additional information at 31 October 2019 is available: (1) Closing inventories Raw materials Work in progress Finished goods K24,000 K19,000 K147,000 K17,000 K4,000 K'000 K15,000 K8,000 195 140 35 2,350 18 250 75 11 26 500 100 442 509 4,142 The following additional information at 31 October 2019 is a is available: (1) Closing inventories Raw materials Work in progress Finished goods (ii) (iii) (v) Prepayments Rent Insurance (vi) Accruals Direct wages Salaries (iv) Salaries are to be apportioned as follows Manufacturing Administration 20% 80% K24,000 K19,000 K147,000 K17,000 K4,000 K15,000 K8,000 Bad debts to be written off amount to K47,000, including sales tax at 17.5 per cent. The company maintains a separate bad debts account. The debts have all been outstanding for more than 6 months. Premises Plant Office equipment Note: In the case of bad debts that have been outstanding for more than 6 months, the sales tax (which will already have been accounted for on the sale of the goods) can be reclaimed from the tax authorities. The allowance for receivables is to be amended to 2.5 per cent of receivables, after adjusting for bad debts written off. (vii) Depreciation of non-current assets is to be provided as follows: 1 January 2020 1 January 2021 2 per cent on cost (not the revalued figure) 10 per cent on cost 20 per cent on reducing balance Twenty-five per cent of premises depreciation is to be apportioned to the manufacturing account. Note: It is to be assumed that there is no expected residual value. (viii) The loan was taken out on 1 November 2018, and the capital is to be repaid as follows: Page 3 of 11 K100,000 K100,000 1 January 2022 K50,000 Interest is to be charged on the outstanding capital at 20 per cent per annum. Required A. Manufacturing account of ABC Ltd for the year ended 31 October 2019 (6 Marks) B. Trading and statement of comprehensive income of ABC Ltd for the year ended 31 October 2019 C. Statement of Financial position of ABC Ltd as at 31 October 2019 (10 Marks) (9 Marks) ABC Ltd prepares its financial statements to 31 October each year. Its trial balance at 31 October 2019 was as follows: Premises-cost Manufacturing plant-cost Office equipment-cost Accumulated depreciation at 1 November 2018 Inventories at 1 November 2018 Raw materials Work in progress Finished goods Premises Manufacturing plant Office equipment Sales of finished goods Purchases of raw materials Returns inwards and outwards Direct wages Heat, light and power Salaries Printing, postage and stationery Rent and insurances Loan interest paid Loan Trade receivables and payables Allowance for receivables Sales tax account Dividend paid Ordinary shares of K1 each Share premium account Retained earnings Bank balance (H) (ii) Prepayments Rent Insurance Accruals K'000 600 350 125 Direct wages Salaries 27 18 255 826 38 575 242 122 32 114 12 287 10 4,142 The following additional information at 31 October 2019 is available: (1) Closing inventories Raw materials Work in progress Finished goods K24,000 K19,000 K147,000 K17,000 K4,000 K'000 K15,000 K8,000 195 140 35 2,350 18 250 75 11 26 500 100 442 509 4,142 The following additional information at 31 October 2019 is a is available: (1) Closing inventories Raw materials Work in progress Finished goods (ii) (iii) (v) Prepayments Rent Insurance (vi) Accruals Direct wages Salaries (iv) Salaries are to be apportioned as follows Manufacturing Administration 20% 80% K24,000 K19,000 K147,000 K17,000 K4,000 K15,000 K8,000 Bad debts to be written off amount to K47,000, including sales tax at 17.5 per cent. The company maintains a separate bad debts account. The debts have all been outstanding for more than 6 months. Premises Plant Office equipment Note: In the case of bad debts that have been outstanding for more than 6 months, the sales tax (which will already have been accounted for on the sale of the goods) can be reclaimed from the tax authorities. The allowance for receivables is to be amended to 2.5 per cent of receivables, after adjusting for bad debts written off. (vii) Depreciation of non-current assets is to be provided as follows: 1 January 2020 1 January 2021 2 per cent on cost (not the revalued figure) 10 per cent on cost 20 per cent on reducing balance Twenty-five per cent of premises depreciation is to be apportioned to the manufacturing account. Note: It is to be assumed that there is no expected residual value. (viii) The loan was taken out on 1 November 2018, and the capital is to be repaid as follows: Page 3 of 11 K100,000 K100,000 1 January 2022 K50,000 Interest is to be charged on the outstanding capital at 20 per cent per annum. Required A. Manufacturing account of ABC Ltd for the year ended 31 October 2019 (6 Marks) B. Trading and statement of comprehensive income of ABC Ltd for the year ended 31 October 2019 C. Statement of Financial position of ABC Ltd as at 31 October 2019 (10 Marks) (9 Marks)

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A Manufacturing Account for the Year Ended 31 October 2019 Particulars Debit K Credit K Opening Work ... View the full answer