Accounting for Manufacturing Firms Part Two

The video answers a question on accounting for manufacturing firms
1. The following balances have been extracted from the books of Royal Manufacturers, a small scale manufacturing enterprise, as at 31 December 2021:
Sh.‘000’
Stocks as at 1 January 2021: Raw materials 7,000
Work in progress 5,000
Finished goods 6,900
Purchases of raw materials 38,000
Direct labour 28,000
Direct Expenses 16,000
Factory Insurance 9,000
Office Rent and rates 19,000
Office Lighting 6,000
Stationery and postage 2,000
Administration Staff salaries 19,380
Sales 192,000
Plant and machinery: At cost 30,000
Provision for depreciation 12,000
Motor vehicles (for sales deliveries): At cost 16,000
Provision for depreciation 4,000
Trade Payables 5,500
Trade Receivables 28,000
Drawings 11,500
Balance at bank 16,600
Capital at 1 January 2021 48,000
Provision for unrealized profit at 1 January 2021 1,380
Motor Vehicle running costs 4,500
Additional information:
1. Stocks at 31 December 2021 were as follows:
Sh.‘000’
Raw materials 9,000
Work in progress 8,000
Finished goods 10,350
2. The factory output is transferred to the trading at factory cost plus 25% of factory profit.
3. Depreciation is provided at the rates shown below on the original cost of Non-current assets held at the end of each financial year.
Plant and machinery at 10% per annum
Motor vehicles at 25% per annum
4. Amounts accrued at 31 December 2021 for direct labour amounted to Sh. 3,000,000 and Office rent and rates prepaid at 31 December 2021 amounted to Sh. 2,000,000.
Required:
Manufacturing, trading and income account for the year ended 31 December 2021
Statement of Financial Position as at 31 December 2021

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