Question
QUESTION ONE Joseph Mokua, a farmer extracted the following trial balance as at 31 October 2004: Sh. 000 Sh. 000 Crop insurance Stocks as at
QUESTION ONE
Joseph Mokua, a farmer extracted the following trial balance as at 31 October 2004:
| Sh. 000 | Sh. 000 |
Crop insurance Stocks as at 1 November 2003 Growing crops, wheat, seeds and fertilizers Livestock Livestock feeds Land and buildings at cost Farm machinery (cost Sh. 5,400,000) Profit and loss account balance (1 November 2003) Loan from Farmers Bank Ltd Sale of wheat Sale of cattle Sale of carcass Managers personal account Bank overdraft Sundry creditors Interest on loan from Farmers Bank Ltd Office expenses Crop expenses Livestock wages Other livestock expenses Purchase of seeds Livestock purchases Livestock feeds purchased Capital Farmhouse expenses Staff meals Repairs to farm machinery Tools and implements (1 November 2003) Sundry debtors Cash in hand Managers salary General farm labour wages | 240
1,000 1,250 300 10,000 3,900
225 200 500 800 615 200 625 35
60 25 50 125 1,500 1,300 300 250 23,500 |
500 3,000 1,750 3,000 750 100 150 750
13,500
_____ 23,500 |
Additional information
The entire crop insurance was taken with effect from 1 November 2003 to provide an annual risk cover against crop losses due to climatic risks such as floods, drought and plant diseases.
Managers salary and staff meals are charged to the livestock and crop activities in the ration of 1:4 respectively.
Depreciation on tools and implements is to be apportioned equally between the crop and livestock activities. The book value of tools and implements as at 31 October 2004 was Sh. 100,000.
Provisions for doubtful debts is to be maintained at 8% of the year end debtors and bad debts of Sh. 25,000 are to be written off.
Farm machinery is to be depreciated at the rate of 20% per annum on cost.
Crops consumed by some of the farm labourers during the year ended 31 October 2004 were valued at Sh. 50,000.
During the year ended 31 October 2004, Joseph Mokuas family members provided general farm labour valued at Sh. 100,000 the family also consumed crops valued at Sh. 160,000.
The loan from Farmers bank Ltd. was obtained on 1 January 2004 and was to be repaid in full by the end of the fifth year. Interest was to be paid semi-annually on 30 June and 31 December at the rate of 15% per annum. The entire loan was used on crop activities.
Assume there were no transfers of inputs between the main activities of crop farming and livestock farming.
Stocks as at 31 October 2004 were as follows.
| Shs. 000 |
Growing crops Wheat, seeds and fertilizers Livestock Livestock feeds | 170 300 2,000 50 |
Required:
Crop account for the year ended 31 October 2004
Livestock account for the year ended 31 October 2004
General profit and loss account for the year ended 31 October 2004.
Balance sheet as at 31 October 2004
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