QUESTION 7 The following trial balance was extracted from the books of Mali Lad, a manufacturing company say 31 December 2010 Sh. 000" Sh."000" 21.000 38.900 13.500 180.000 145.000 55.000 7.000 3,500 370,000 230,000 12.000 31.000 7.500 13.700 1.000.000 Inventories as at 1 January 2010 Raw materials Finished goods Work in progress Wages: Direct Factory Sale of serap raw materials Royalties Carriage inwards Purchases of raw materials Machinery (Cost Sh.280,000,000) Computers (Cost Sh 20,000,000) General factory expenses Lighting Factory power Sales Administrative salaries Sales representative salaries Commission on sales Reni Insurance General administrative expenses Bank charges Discounts allowed Carriage outwards Accounts payable Ordinary share capital (Sh. 10 cach) 10% debentures Buildings Accounts receivable Balance at bank Cash in hand Allowance for doubtful debts Retained profits (1 January 2010) Debenture interest 14.000 30,000 11.500 12.000 4.200 13.400 2.300 4.800 5.900 64.000 360.000 60.000 111.000 142,300 76,800 1,500 6.500 10.300 3.000 1.535,800 L.135.800 Additional information: Rent insurance and lighting expenses are to be apportioned between factory, office and distribution as follows: Factory Office Distribution % % % Rent 70 30 Insurance 60 10 30 Lighting 80 20 ? Allowance for doubtful debts is to be maintained at 5% and bad debts of Sh. 3.500.000 are to be written oft Inventories as at 31 December 2010 were valued as follows: Sh. Raw materials 14,000,000 linished goods 42,000,000 Work in progress 15.500.000 4. Accrued rent and general administrative expenses as at 31 December 2010 amounted to Sh. 1.200,000 and Sh1.500,000 respectively. 5. Prepaid insurance as at 31 December 2010 amounted to Sh.360,000 6. A provision for corporation tax amounting to Sh.25,340,000 is to be made 7. Depreciation is to be provided as follows: Asset Rate per annum Machinery 12.5% on reducing balance basis Computers 15% on straight line basis Ignore depreciation on buildings 8. The directors propose to pay a dividend of Sh.0.50 per share, Required;- a) Manufacturing, trading and income statement for the year ended 31 December 2010 b) Statement of financial position as at 31 December 2010 May 2011 Question Form