QUESTION THREE Carol and Mary are injured sharing profit and losses equally They make handbags under the brand name CARY Capital Carol Mary Drawing Carol Mary Sh.'000' Sh.'000' 24,000 24,000 1 5,000 4,800 Land 15,200 Factory building at cost 20,400 Accumulated depreciation on factory building 15,370 Delivery vans at cost 8,100 Accumulated depreciation on delivery vans 1,912 Inventory (1 January 2021): Kaw materials 2,100 Work in progress 2,210 Finished goods (10,250 handbags at sh. 2,000 each) 20,500 Sales 63,200 Return inward 112 Purchase of raw materials 14,590 Tax 3,960 Factory wages 7,630 Office salaries 2,500 General expenses: Factory 7,730 : Office 9,470 Plant at cost 17,220 Accumulated depreciation on plant 5,870 Provision for unrealized profit (1. Jan. 2021) 2,050 Allowance for doubtful debts Trade receivables and payables 770 10,680 2,640 Bank overdraft 4,670 148,442 Additional information: 148,442 1. During the year ended 31 December 2 at a price of sh. 2,400 each. of 16,727 handbags were transferred to the warehous 2. As at 31. December 2021, inventory was valued as follows: Raw materials sh. 1,900,000 Work in progress sh. 2,880,000 ■ Finished goods sh. 17,428,800 3. All handbags are sold at sh. 3,200 each waj 4. The allowances for doubtful debts is to be maintained at 5% of the trade receivables 5. Accrued general expenses as at 31 December 2021 were as follows: Factory expense Sh. 1,748,000 Office Sh.764,000 6. As al 31 December 2021, rent and rates were prepaid as follows: Factory reat Sh. 104,000 Office Sh. 80,000 7. Depreciation is to be provided on cost as follows: 8. Carol is entitled to 25% of the manufacturing profit based on the transfer price to the warehouse while Mary is entitled to 10% of the trading gross profit. 9. No interest is credited or charged on capital accounts or drawings Required: (a) Manufacturing account for the year ended 31 December 2021 (b) Income Statement of the year ended 31 December 2021 fi ftant of financial position as at 31December 2021 (20 Marks)
