iii) Partnership balance sheet as at 31/12/2013 marks) QUESTION TWO a) Differentiate the following..

iii) Partnership balance sheet as at 31/12/2013 marks) QUESTION TWO a) Differentiate the following..

iii) Partnership balance sheet as at 31/12/2013 marks)QUESTION TWO

a) Differentiate the following giving examples in each case

(7

i) Capital reserves (2 marks )
ii) Revenue reserves (2 marks )

b) PKF manufacturers trial balance as at 31st Dec 1995 was as follows

Capital

15,000

Drawings 2,000
Opening stock at 1/1/95 – Raw Material 3,400
– Working in progress 5,000

-Finished goods

6,100
Purchases of raw material 18,000
Carriage inwards of raw material 800
Direct factory wages 18,500
Office Salaries 16,900
Salesmen salaries 10,400
Sales finished goods

90,000

Office expenses 1,950
Lighting 2,500
Rent 3,750
Insurance 950
Advertising 1400
Royalties 650
Discount received

1,600

Carriage outwards 375
Plant and machinery at cost 9100
Sales and machinery at cost 4,200
Bank 3,600
Cash in hand

Provision for depreciation on plant &machinery

325
at 1/1/97

100

Debtors 7700
Creditors

10,900

Total 117,600 117,600

Additional information

1. Closing stock at 31st December 1995 -Raw materials shs 2900 -Work in progress shs 3000

-Finished goods shs 8200

2. Lighting and rent expenses are to be apportioned as follows: 4/5 factory, 1/5 Office

3. Insurance expenses is to apportioned as follows; ½ factory ½ office

4. Unpaid direct factory wages was sh 2000 as at 31/12/ 95

5. Prepaid office salaries were shs 900 as at 31/12/ 95

6. Depreciation is to be charged as follows

? Plant and machinery at 10% p.a using the reducing balance method ? Sales van at 5% p.a on cost.

Required

Prepare a manufacturing income statement as at 31/12/95 as well as a statement of financial position (16 marks )