Reference no: EM132983352
Question: The following balances have been extracted from the books of Theta
Manufacturers, a small scale manufacturing enterprise, as at 31 December 2020:
Sh.'000
Stocks as at 1 January 2020: Raw materials 7,000
Work in progress 5,000
Finished goods 6,900
Purchases of raw materials 38,000
Direct labour 28,000
Factory overheads: Variable 16,000
Fixed 9,000
Administrative expenses: Rent and rates 19,000
Lighting 6,000
Stationery and postage 2,000
Staff salaries 19,380
Sales 192,000
Plant and machinery: At cost 30,000
Provision for depreciation 12,000
Motor vehicles (for sales) At cost 16,000
Provision for depreciation 4,000
Creditors 5,500
Debtors 28,000
Drawings 11,500
Balance at bank 16,600
Capital at 1 January 2020 48,000
Provision for bad debts at 1 January 2020 1,380
Motor Vehicle running costs 4,500
Additional information:
1. Stocks at 31 December 2020 were as follows:
Sh.'000
Raw materials 9,000
Work in progress 8,000
Finished goods 10,350
2. The factory output is transferred to the trading account at factory cost plus 25% of factory profit.
3. Depreciation is provided based on the original cost of fixed assets held at the end of each financial year. Plant and machinery - 10% p.a., Motor vehicles - 25% p.a.
4. Amounts accrued at 31 December 2020 for direct labour amounted to Sh.3 million and rent and rates prepaid at 31 December 2020 amounted to Sh.2 million.
5. Provision for bad debts is maintained at 5% of debtors
Required:
(a) Manufacturing, trading and profit and loss account for the year ended 31 December 2020.
(b) Balance sheet as at 31 December 2020.