1. **Stating the problem:** Prepare the manufacturing, trading, and profit and loss account for the year ended 30 April 2001 using the provided financial data and additional information. 2. **Calculate plant depreciation for the year:** - Plant cost = Sh. 6,000,000 - Depreciation rate = 10% per annum - Depreciation expense = $6,000,000 \times 0.10 = 600,000$ 3. **Calculate raw materials used:** - Opening raw materials = Sh. 350,000 - Purchases = Sh. 3,950,000 - Closing raw materials = Sh. 500,000 - Raw materials used = Opening + Purchases - Closing = $350,000 + 3,950,000 - 500,000 = 3,800,000$ 4. **Calculate factory overheads:** - Factory rent and rates = Sh. 1,400,000 - Factory light, heat and power = Sh. 655,000 - Works manager's salary = Sh. 245,000 - Plant repairs = Sh. 400,000 - Plant depreciation (from step 2) = Sh. 600,000 - Total factory overheads = $1,400,000 + 655,000 + 245,000 + 400,000 + 600,000 = 3,300,000$ 5. **Calculate factory cost of production:** - Raw materials used = Sh. 3,800,000 - Manufacturing wages = Sh. 3,000,000 - Factory overheads = Sh. 3,300,000 - Work-in-progress opening = Sh. 1,800,000 - Work-in-progress closing = Sh. 2,300,000 - Factory cost = Raw materials used + Manufacturing wages + Factory overheads + Opening WIP - Closing WIP - Factory cost = $3,800,000 + 3,000,000 + 3,300,000 + 1,800,000 - 2,300,000 = 9,600,000$ 6. **Calculate cost of finished goods transferred to warehouse:** - Finished goods completed = 10,000 units - Factory cost of finished goods = Sh. 3,500,000 (opening finished goods) + Factory cost (step 5) - Opening WIP + Closing WIP - But since finished goods are transferred at cost plus 25%, transfer price = $Factory\ cost \times 1.25$ - Cost of finished goods transferred = $9,600,000 \times 1.25 = 12,000,000$ 7. **Trading account:** - Sales = Sh. 18,000,000 - Opening finished goods = Sh. 3,500,000 - Add: Finished goods transferred at transfer price = Sh. 12,000,000 - Less: Closing finished goods at transfer price (assumed 3,500 units at factory cost $3,500,000$, so transfer price = $3,500,000 \times 1.25 = 4,375,000$) - Cost of goods sold = Opening finished goods + Finished goods transferred - Closing finished goods = $3,500,000 + 12,000,000 - 4,375,000 = 11,125,000$ - Gross profit = Sales - Cost of goods sold = $18,000,000 - 11,125,000 = 6,875,000$ 8. **Profit and loss account:** - Gross profit = Sh. 6,875,000 - Administrative overheads = Sh. 1,800,000 - Factory lease amortisation = Sh. 1,200,000 - Net profit = Gross profit - Administrative overheads - Amortisation = $6,875,000 - 1,800,000 - 1,200,000 = 3,875,000$ **Final answer:** - Manufacturing cost = Sh. 9,600,000 - Cost of goods sold = Sh. 11,125,000 - Gross profit = Sh. 6,875,000 - Net profit = Sh. 3,875,000