Question 1 The following Trial Balance was extracted from the books of Samaritan Products Ltd on December 31, 2012 Trial Balance Details Accounts Dr $ Cr $ Provision for unrealized profits 375,000 Stock of finished goods, January 1, 2012 2,875,000 Sales 68,108,000 Capital 25,395,000 Stock of direct materials, January 1, 2012 4,200,000 Motor vehicles 14,000,000 Provision for depreciation on motor vehicles 5,600,000 Accounts receivable 12,000,000 Cash in hand 1,500,000 Discounts 400,000 345,000 Bad debts 430,000 Cash drawings 2,000,000 Plant and machinery 20,000,000 Accumulated depreciation on plant and machinery 5,000,000 Sales returns 108,000 Purchases of direct raw materials 15,600,000 Direct expenses 2,000,000 Bank balance 500,000 Work in progress, January 1, 2016 2,800,000 Provision for bad and doubtful debts 240,000 Direct raw materials returned to suppliers 100,000 Accounts payable 2,600,000 Transportation expenses for direct raw materials 1,400,000 Insurance 600,000 Office furniture, etc 4,500,000 Accumulated depreciation on office furniture, etc 2,000,000 Stationery 300,000 Motor vehicles repairs 500,000 Electricity 2,200,000 Commission 5,000,000 650,000 Production workers wages 10,000,000 Indirect raw materials 800,000 Miscellaneous expenses 1,200,000 Office salaries 6,500,000 Total 110,913,000 110,913,000 Notes Stock as at December 31, 2012 direct raw materials $3,000,000 work in progress $2,000,000 and finished goods $2,645,000 Insurance was to be apportioned 75 to the factory miscellaneous expenses 2 3 to the factory electricity 0 20 to the office while the motor vehicles were used 70 of the time for factory purposes On December 31, 2012, $150,000 paid for indirect raw materials related to the succeeding financial period, while discount received amounting to $200,000 was not booked to the account On December 31, 2012, $60,000 was owed for stationery The Provision for bad and doubtful debts is to be adjusted to 3 of debtors and its the companys policy to add 15 mark up to its cost of production Depreciation is to be provided for as follows Plant and machinery 10 reducing balance motor vehicles 15 reducing balance and office furniture, etc 10 straight line REQUIRED Prepare Manufacturing, Trading and Profit and Loss Account for the year ending 31 December 2018 (28 marks) A Balance Sheet as at 31 December 2018 (12 marks) Use the information in parts (a) (b) to calculate the following ratios (10 marks) Industry Average Gross profit percentage 32 3 Net profit percentage 17 3 Current ratio 2 6 Liquid ratio 1 5 Average stock Return on capital employed (ROCE) 16 2 Stock turnover 9 Working capital Debtors collection period 35 days Creditors payment period 14 days Using the ratios calculated above and the information relating to industry average, prepare a two page report on the financial performance of G E Production Company Ltd when compared to industry standards (15 marks) Based on the performance of G E Productions briefly discuss TWO(2) recommendations you would make to ensure improved performance in the future (5 marks)

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Question 1

The following Trial Balance was extracted from the books of Samaritan Products Ltd on December 31, 2012:

Trial Balance

Details/Accounts	Dr $	Cr $
Provision for unrealized profits		375,000
Stock of finished goods, January 1, 2012	2,875,000
Sales		68,108,000
Capital		25,395,000
Stock of direct materials, January 1, 2012	4,200,000
Motor vehicles	14,000,000
Provision for depreciation on motor vehicles		5,600,000
Accounts receivable	12,000,000
Cash in hand	1,500,000
Discounts	400,000	345,000
Bad debts	430,000
Cash drawings	2,000,000
Plant and machinery	20,000,000
Accumulated depreciation on plant and machinery		5,000,000
Sales returns	108,000
Purchases of direct raw materials	15,600,000
Direct expenses	2,000,000
Bank balance		500,000
Work-in-progress, January 1, 2016.	2,800,000
Provision for bad and doubtful debts		240,000
Direct raw materials returned to suppliers		100,000
Accounts payable		2,600,000
Transportation expenses for direct raw materials	1,400,000
Insurance	600,000
Office furniture, etc.	4,500,000
Accumulated depreciation on office furniture, etc.		2,000,000
Stationery	300,000
Motor vehicles repairs	500,000
Electricity	2,200,000
Commission	5,000,000	650,000
Production workers wages	10,000,000
Indirect raw materials	800,000
Miscellaneous expenses	1,200,000
Office salaries	6,500,000	----------------
Total	110,913,000	110,913,000

Notes:

Stock as at December 31, 2012: direct raw materials $3,000,000; work- in- progress $2,000,000; and finished goods $2,645,000.
Insurance was to be apportioned 75% to the factory; miscellaneous expenses 2/3 to the factory; electricity 0.20 to the office; while the motor vehicles were used 70% of the time for factory purposes.
On December 31, 2012, $150,000 paid for indirect raw materials related to the succeeding financial period, while discount received amounting to $200,000 was not booked to the account. On December 31, 2012, $60,000 was owed for stationery.
The Provision for bad and doubtful debts is to be adjusted to 3% of debtors and its the companys policy to add 15% mark up to its cost of production.
Depreciation is to be provided for as follows: Plant and machinery 10% reducing balance; motor vehicles 15% reducing balance; and office furniture, etc. 10% straight line.

REQUIRED:

Prepare Manufacturing, Trading and Profit and Loss Account for the year ending 31 December 2018. (28 marks)

Use the information in parts (a) & (b) to calculate the following ratios: (10 marks)

Industry Average

Using the ratios calculated above and the information relating to industry average, prepare a two page report on the financial performance of G & E Production Company Ltd when compared to industry standards. (15 marks)

Based on the performance of G & E Productions briefly discuss TWO(2) recommendations you would make to ensure improved performance in the future. (5 marks)