The following trial balance was taken from the records of Stony Athi Manufacturing Company at the beginning of 2020. DEBIT CREDIT Sh ‘000 sh ‘000 Cash sh 3,000 Raw material inventory 750 Work in...


The following trial balance was taken from the records of
Stony Athi Manufacturing Company
at the beginning of 2020.



DEBIT CREDIT



Sh ‘000 sh ‘000


Cash sh 3,000


Raw material inventory 750


Work in process inventory 1,200


Finished goods inventory 2,100


Property, plant and equipment (PPE) 7,500


Accumulated depreciation – PPE 3,000


Contributed capital – ordinary shares 5,400


Retained earnings 6,150



Total

sh 14,550
sh 14,550



Transaction for the accounting period.


1. Stony purchased sh 5,700,000 of
direct materials
and sh 300,000 of
indirect raw materials
on credit. The indirect material were capitalized on the
Production supplies account. Material requisitions showed that sh 5,400,000 of direct raw materials had been used for production during the period. The use of indirect materials is determined at the end of the year by physically counting the supplies on hand.


2. By the end of the year, sh 5,250,000 of the accounts payable had been paid in cash.


3. During the year, direct labour amounted to 95,000 hours recorded in the wages payable account at sh 105.00 per hour.


4. By the end of the year, sh 9.0 million of wages payable had been paid in cash.


5. At the beginning of the year, the company expected overhead costs for the period to be sh 6.3 million and 100,000 direct labour hours to be worked. Overhead is allocated based on direct labour hours, which was indicated in event 3 above, amounted to 95,000 hours for the year.


6. Administrative and sales expenses for the year amounted to sh 900,000 paid in cash.


7. Utilities and rent for the production facilities amounted to sh 4.650 million in cash.


8. Depreciation on the plant and equipment used in production amounted to sh 1.5 million.


9. Assume that sh 12 million of goods were completed during the year.


10. Assume that sh 12.75 million of finished goods inventory was sold for sh 18.0 million cash.


11. A count of the production supplies revealed a balance of sh 89,000 on hand at the end of the year.


12. Any –over- underapplied overhead is considered to be insignificant.



Required


a) Record the 2020 transactions in the general journal.
(12 Marks)

May 26, 2022
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