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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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