Question 1

Chemical Company sells its products in returnable drums. Customers are billed at shs. 500 for each drum at the time of sale and credited with shs. 400 if the drums are returned in two months. In case drums are returned in damaged condition, credit is given only for shs. 200. The following figures are available for the year ended on 31st March 2018: Numbers Shs'000 Returnable stock with customers on 1st April 2017 2,000 4,000 Stock on hand as on 1st April 2017 500 1,000 Drums purchased during the year 1,500 4,500 Drums sent out during the year 5,000 Returnable drums with customers as on 31* March 2018 1,000 Drums returned in damaged condition during the year 500 Drums not returned at the scheduled time during the year 2,000 All stock is to be valued at cost. Damaged drums are to be valued at 50% of cost. During the year shs. 10,000,000 was received from Debtors on account of drums