Assignment #2

Question #4

National Distributors Ltd is a manufacturing company whose annual financial performance is determined by preparing its final accounts at the end of the financial period which ends on October 31st each. The following Trial Balance was extracted from the companys books on October 31, 2016:

Trial Balance

Details/Accounts	Dr $	Cr $
Cash at bank	20,000,000
Furniture and office equipment	4,000,000
Provision for depreciation furniture and fittings		800,000
Administrative salaries	12,000,000
Discounts	400,000	320,000
Production supervisors salaries	8,000,000
Net sales		105,000,000
Accounts payable		4,500,000
Direct raw materials inventory, November 1, 2015	4,500,000
Expenses for trucking direct raw materials	2,800,000
Electricity	3,000,000
Purchases of direct raw materials	25,200,000
Janitorial wages	800,000
Finished goods inventory, November 1, 2015	5,500,000
License fees paid to produce goods	2,000,000
Commission	3,600,000
Interest		2,500,000
Capital		30,870,000
Cash in hand	2,400,000
Rent	3,600,000
Direct raw materials sent back to suppliers		200,000
Accounts receivable	7,000,000
Insurance	1,500,000
Bills receivable	400,000
Work-in-progress, November 1, 2015	3,800,000
Bad debts	250,000
Cash drawings	650,000
Motor vehicle repairs	2,200,000
Production workers salaries	18,000,000
Provision for bad and doubtful debts		210,000
Motor vehicles	10,000,000
Accumulated depreciation on motor vehicles		2,000,000
Provision for unrealized profits		500,000
Machinery	12,000,000
Provision for depreciation on machinery		1,200,000
Long term loan	-------------	5,500,000,
Total	153,600,000	153,600,000

Notes:

1. On October 31, 2016, $200,000 due for motor vehicle repairs was still unpaid; interest receivable for $300,000 was not booked to the account and $100,000 was owed for commission.
2. Inventory on October 31, 2016 were as follows: Direct raw materials $3,700,000; work-in-progress $4,700,000; finished goods $6,600,000.
3. The provision for bad and doubtful debts should be moved to 2.5% of debtors while the company has a policy in place that adds 10% mark up to its cost of production.
4. Rent is apportioned 3/5 to the factory while seventy percent of the electricity usage is for the factory; 40% of insurance charges are for the office while the motor vehicles are used equally between the office and the factory.
5. Depreciation is to be charged as follows: machinery 10% reducing balance; motor vehicles 20% reducing balance; furniture and office equipment 10% straight line.

Required:

1. Prepare Manufacturing, Trading and Profit and Loss Accounts for the year ending October 31, 2016. (28 marks)
2. Prepare a Balance Sheet as at October 31, 2016. (12 marks)