FINANCIAL STATEMENTS

1. Margin = G.P = Sales – Cost

*
Sales Sales
20 S = S – (160,000 + 1800,000- 200,000)
100 S- 1q,1760,000
80 S = 1,1760,000
100
S = 17600X 100
80

2. The following balances were r extracted from the books of Masai retailers
on 14th July 2000
Prepare the trading account for the period ended 14th July 2000

Masai net trading account for the year ended 14th July 2000

Opening stock 30 000 Sales 1 000

000
Purchases 800 (Less) return inwards 20
000 000
(less) return 15 785 Net sales 980
000 000 000
G.A.S 815
000
Closing stock 80
000
C.O.S 735
000
Gross profit 245
000
980 980
 000 000

Mark up=GP/COS X100=20

1
/5-1= ¼ x25=GP/980 000
=25X980 000/100
=Sh.245 000

3. Margin;
G.P X 100
Net sales
90,000 x 100=33 1/3
270,000
R.O.S.T. = Cost of goods sold
Average stock
= 180000
115,000
=1.6 times

4. Average stock 120,000

ROSTO = 3times
(a) From ROSTO = cost of sales = COS
Average stock 120,000
3 = COS
120,000
COS = 120,000 x 3 = 360,000

(b) From margin, Mark up = 1 = 1

4–1 3
1 = GP
3 COS
1 = GP = 3GP = 360,000
3 360,000
GP = 120,000
Gross Profit = Shs. 120,000

(c) From margin = ¼ = GP

sales
Sales = 4 x 120,000
Sales = 480,000
5. Bondo traders
Trading account
For the year ended 31 Dec 2004

Opening 2 000 Sales 56 400

Purchases 46 000
48 500
Less closing stock 1 500
49 000
G P c/d 9 400
56 400 56 400

6. -External borrowing e.g. from IMF and World Bank

- Solicit for foreign grants/donations/aids from donor countries
- Reduce government expenditure through cost-cutting measures
- Sale and lease back of public assets
- Introducing new taxation of selected goods

7.

Half Bilha Traders

Profit and loss Account
For the month ended 30th Sep, 2009
Cost of sales Net sales 300000
150000
Gross profit c/d 300000
50000 Gross profit b/d 150000

300000 Discount received 6000

Expenses
Carriage outwards
12000 156000
Bad debts Net profit 74000
30000
Wages
25000
Rent
15000
Net profit
74000

156,000
8. (a) Gross profit

Mark up = G.P = 2
cost of sales 3
Margin = 2/2+ 3 = 2/5
h.p = 2/5 x 5,400,000 = 2,160,000

(b) Cost of sale = sales – G.P

5,400,000 – 2,160,000 = 3,240,000


(c) Net profit = G.P – Expenses

= 2,160,000 – 800,000 = 1,360,000

9. The following information relates to Mandu enterprises limited

Stock (1.1.2009) 40000
Stock (31.1.2009) 60000
Purchases 500000
Margin 20%
Prepare Mandu Enterprises Limited Trading account for the year ended 31st
December, 2009

MANDU ENTERPRISES LIMITED

TRADING AND ACCOUNT
For the period ended 31st Dec, 2009

Dr Cr
Shs.
Shs Sales 600000
Opening stock 40000
Add purchases 500000
COGAS 540000
Less closing stock 60000
COGS 480000
 Gross profit 20000 600000
600000

Margin to mark up
20% or 1/5 = 1/5-1 = ¼

 Gross profit = ¼ x 480000 = 120,000

10. a) Working capital

= current assets – current liabilities

= 320000 – 99000 = 221000

b) Return on capital

= NP x 100
Capital invested
= 95000/525000 x 100 = 18.09%

11. Mark- up = G.P x100

Cos
10%=G.P X100
96,000
GP=9,600
Sales=Cost +G.P = 96,000+9600=105,600

Atis
Trading and loss account
For the month ending 30-6-2008
Opening stock 22,000 Sales 105,600
Add purchases 100,000
Co GAS 122,000
Less c.s 26,000
Cos 96,000
G.P c/d 9,600
105,600 105,600
 BAL b/d 9,600

12. SHAH TRADERS

Trading account for the period trading 30th June
2010
Opening stock Sales
65000 280000
Add purchases Less sales returns
190000 (4200)
Less purchases returns (10000)
180000 275800
Goods available for sale
245000
Less closing stock
70000
Cost of sales
175000
Gross profit c/d
100800

275800 275800
Gross profit b/d
100800
13.
Chombo wholesalers
Trading A/C for the year
Ending 31st Dec, 2009

Opening stock Sales 500000

80000
Add purchases
320000
Goods available for sale
400000
Less closing stock
40000 500000
Cost of sales Gross profit b/d 140000
360000
Gross profit c/d
140000

500000

a) Margin = G.P X 100

sales
= 140000 X 100
500000
=28%

b) Current ratio = Current assets : current liabilities

Current asset = 40000 + 140000 = 180000
Current liabilities = 90000
180000 : 90000
2:1
 c) Rate of stock turnover = cost of sale Average stock
= 80000 + 40000
Average stock
2
= 360000
= 60000
60000
= 6 times

14. i) Sales for the year

Mark up = GP X 100
COGS
25 = 100,000 x 100
COGS
COGS = 100,000 X 100
25
COGS = kshs. 400,000
But sales = COGS + GP
= 400,000 + 100,000 = kshs. 500,000

ii) Rate of stock turn over

Rates of stock turn over COGS

Av
Average stock = opening stock + closing stock
2
Closing stock = purchases + opening stock -COGS
= 400,000 + 40,000 – 400,000
= Kshs. 40,000

FINANCIAL STATEMENTS
1. Mark up = GP
Cost of sales
¼ = GP
60,000
4GP = 60,000
 GP = 15,000.
i) Net sales = Cost of sales + gross profit
60,000 +15,000 =75,000
ii) Average stock : stock turn = cost of sales
Av. stock
5
/1 + 60,000
AV
5AV + 60,000
AV = 12,000
iii) Opening stock .
AV = op.st + cl.stock
2
24,000 = 8000 + op stock
Op.stock = 16,000
iv) Cost of sales
op.st + p – cls
60,000 = 16,000 + p – 8000
Purchases = 42,000

2. Vumilia Traders
Trading, profit and loss account
For the year ending 31st December 2006.

Opening Stock 25,000 Sales

120,000
Add. Purchases 45,000
70,000
Add. Carriage on purchases 1,200
Cost of good sold 71,200
Less. Closing stock 25,000
Cost of sales 46,200
Gross profit c/d 73,800
120,000
120,000
Expenses
Carriage on sales 2,000 Gross profit b/d
73,800
Discount allowed/ 3,400 Add: Dis received
1,950
Insurance paid 5,900
Less Prepaid 900
 5,000
Salaries 12,450
ADD Outstanding salaries 450
12,900
Machinery 12,800
Total Expenses 36,100
Net profit c/d 39,630
75,730
75,730

Vumilia Traders
Balance sheet
AS AT 31st December 2006

Machinery 128,000 Capital

125,000
LESS Deprec 12,800 Add. Net Profit
39,630
115,200
164,630
Stock 25,000
Insurance prepaid 900
Debtors 25,000 creditors
15,500
Bank 14,500 outstanding salaries
450

180,600
180,600

3. Mapato Traders
Balance sheet
st
As at 31 dec 2009

Fixed assets
Land and building 300 000 capital 422 930
Furniture and fittings 51 500 +net profit 220 500
Machinery 140 000 643 430
Motor vehicle 190 000 -drawings 175 000
681 500 468 430
Current assets long term liabilities
Stock 124 500 mortgage loan 30 000
Debtors 103 650 bank loan 400 000
Cash at bank 54 850 430 000
Cash at hand 3650 current liabilities
286 650 creditors 99 730
968 150 968 150
i) Working capital

Working capital=current assets-current liabilities

CA=stock+ debtors+ cash in hand+ cash at bank
=124500 +103650 +54850 +3650 =sh 286650
CL=creditors=99720
∴W.C=286650-99720 = sh 186,920
 ii) Return on capital

Return on capital=net profit x 100

Capital invested
=220500 x 100
422930
=52%
iii) Current ratio

iv) Capital employed

Capital employed=capital owned +long liability

=468430+400000 = 868430
Or
=fixed assets + working capital
=481500+186930 =868,430

v) Borrowed capital

Borrowed capital=long term liabilities

=mortgage loans +bank loan
=300000+100000 =sh 400000

Chunga Traders
Profit & Loss A/C
For the Period Ending 31/12/2000

Kshs
Kshs
Salary 20,000 Gross profit
80,000
Rent 12,000 Discount received
4,000
 Electricity 3,000 Commission received
6,000
Net Profit 55,000

90,000
90,000

Chunga Traders
Balance Sheet
As At 31/12/2000

Kshs. Kshs.
Capital - 395,000
Fixed Assts 350,000 + Net Profit 55,000
- Drawings 50,000
Cash 60,000 Closing Stock 400,000
Debtors 20,000 Bank overdraft 10,000
Stock 30,000 Creditors 50,000

460,000 460,000

(i) Working Capital = CA - CL

= 110,000 – 60,000 = 50,000
(ii) C. Employed = FA + WC
= 350,000 + 94,000 = 444,000

5.
Nyamaiya Traders
Profit & Loss Account for the year ended 31st May 2009
Depreciation: Equipment Gross profit
180,000 400,000
Furniture Commission received
43,500 170,000
Power & lightning Less: Advance 10,000
24,000 160,000
General expenses Discounts received
240,000 40,000
Increase in provision for bad debts
500
Discounts allowed
29,000
Net profit c/f
83,000

600,000 600,000

Nyamaiya Traders
Balance sheet as at 31st May 2009
Fixed assets Capital 1,000,000
Equipment 900,000 ADD: net profit 83,000
LESS: Depreciation 180,000 1,083,000
720,000
Current liabilities
Furniture 500,000 Advance commission received 10,000
LESS: Depreciation 108,500 Creditors 550,000
391,500
 Current Assets
Stock
35,000
Debtors 350,000
LESS: Provision 3,500
346,500
Cash in hand
150,000

1,643,000 1,643,000

6. Margin = G II GH2 = if margin = 40 2

100 5
Them mark up = 2 = 2
5-2 3
(i) 40 = GII
100 270,000
GP = 40 X 270,000
100
= 108,000

(ii) Net Profit = GP – Expenses

= 108,000 – 40,000
= 68,000
(iii) Average Stock
R.O.S.T = Cost of Sales
Average Stock.
6 = 162,000 Average Stock. = 162,000 = 27,000

Average Stock. 6

Mark = GP
Cost of sales
= 108,000 X 100 = 66.6 %
162,000

7. Omollo’s traders for the year 2006

(i) Gross profit
Margin = Gross profit
Net sales
40% = G. p
270,000
 Margin= 2 = G. p
5 270,000
5GP 2 x 270,000
5 5
GP = Shs.108,000
(ii) Cost of goods sold= sales – cost of goods sold
Cost of sales = 270,000 – 108,000
Cost of sales = shs.162,000

(iii) Net profit= Gross profit – Expenses

Cost of sales = 108,000 – 40,000
N.P = Shs.68,000

(iv) Average stock

Rate of stock turnover = cost of sales
Average stock
6 = 162,000
A.S
A.S = 162,000
6
A.S= shs.27,000

8. a) (i) Cost of sales

R.O.S.T.O = G.O.S/A.S
Firm x
6.4 = COS/AV ________ 6.4 = COS/8000
COS = 8000 x 6.4 = Shs.51, 200
Firm y
6.5 = COS/7000
COS = 7000 x 6.5 = 45,500
ii) Gross profit
Mark up = Gross profit
Cost of sales
Firm X
20
/100 = G.P/51,200
G.P = 20 x 51200
100
G.P = 10,240
Firm Y
20
/100 = G.P/45500
G.P = 20 x 45500
100
= 9100

iii) Rate of return on capital = Net profit x 100

Capital
Firm X = 4608/30720 x 100 = 15%

Firm Y = 4914/24570 x 100 = 20%

9.
LADOPHARMA CHEMIST
TRADING RPOFIT AND LOSS A/C
For the year ended 30th June 2008
Shs.
Shs. Sales
Opening stock 130,900
23,910 Return inwards
Purchase 550
92,100
Returns outwards 307 130,350
91,973 Gross profit b/d
Carriage inwards 41,907
215

115,918
Slowing stock
27,475
Cost of sales
88,443
Gross profit c/d
41,907

130,350

Carriage outwards
309
Moor expenses
1,630 41,907
Rent
2,970
Telephone charge
405
Wages
12,810
Insurance
492
Office expenses
1,377
Sundry expenses
284
Net profit c/d
21,630

41,907
 LODAPHARMA CHEMIST
BALANCE SHEET
As at 30th June 2008
Capital 30,955 Fixed assets
Net profit 21,630 52,630 Equipment 6,250
Drawings 8,420 Motor vehicle 4,100 10,350
44,165
Current liabilities Current assets
Creditors 9,370 Stock 27,475
Debtors 12,300
Bank 3,115
Cash 295
43,185
53,535 53,535

10.
JAO TRADERS
TRADING AND PROFIT & LOSS ACCOUNT
FOR THE YEAR ENDING 31/12/2008
DR
CR
Opening stock Sales
60000 208000
Add purchases 161000 Less returns in
Add carriage 11000 27000
172000
Less returns out (25000) 181,000
147000
G.A.F.S
207000
LESS closing stock
(72000)
 Cost of sales
135000
Gross profit c/d 181000
46000

181000 Gross profit

46000
Expenses Discount rec
Discount allowed 8000
2000 Net loss c/d
Salaries 800
20000
Tel charges 5000
Less prepaid 1000
4000
Water bills 2100
Add accrued 1300
3300
Electricity expenses
2000 54800
Carriage out
10000
Insurance paid
1000
Dep on equil (10/100 x 125000)
12500

54800

Net loss b/d

800

11. The following trial balance relates to JOKOBURA STORES

 DR CR

JAKOBURA TRADERS
PROFIT AND LOSS A/C FOR THE YEAR ENDED 31/12/006
SHS SHS SHS SHS

Opening stock 48 000 sales 425

000

purchases 344

500

Cost of goods available for 392

sales 500

Less closing stock 52 500

Costs of goods sold 340

000

Gross profit c/d 85 000

425 425

000 000

salaries 45200 Gross profit 85 000

b/d

Add general expanses accrued 1200 46 400 commission 42 800

electricity 15240

Less drawing 340 15 080

depreciation

Motor vehicles 37 500

150000x25/100

Furniture 30000x7/100 2 100

Equipment(55200-48576) 6624

Net profit c/d 20096

127 127800

800

12. The following information relates to Odongo Traders for the year ended
31.Dec 2008.
i) A balance sheet as at 31st Dec. 2008

Odongo traders
Balance sheet as at 31st Dec 2008
F.A
Land 50,000 Capital 94,000
Machinery 20,000 Less drawings 4000
M/vehicles 30,000 100000 90,000
Current assets Long term liabilities
Stock 10,000 10yrs loan 20,000
Debtors 6,000 5yrs AFC loan 10,000
Cash at bank 10,000 30,000
Cash at hand 2,000 28,000 Short term loan
Creditors 6000
Expense occurred 2,000√
8,000
128,000
128,000
ii) calculate-Borrowed capital = long term liabilities
= 20,000+10,000
= 30,000 -current ratio
Current assets : current liabilities
28,000:8000
28:8
7:2 -capital owned
 C =A-L
= 128,000-38,000 = 90,000
Or
Capital-drawings
94,000-4000=90,000

13. BOSONGO WHOLESALERS

Trading, profit and loss
Account
For the year ended 30th June 2008

SHS SHS SHS

SHS Opening stock 400 Sales
7000
Add purchases 3500 Less sales returns 150
6850
Less purchases returns 200 3300
3700
Less closing stock 500
Cost of sales 3200
Gross profit c/f 3650
6850
6850

Discount allowed 90 Gross profit b/f

3650
Insurance 210 Discount received
80
Net profit c/f 3530 Rent received
100
3830
3830
 BOSONGO WHOLESALERS
Balance sheet As at 30th June 2008

Fixed assets SHS SHS SHS

SHS Furniture fitting 2000 Capital
13870
Motor vehicles 15000 17000 Add N.P 3530
17400
Current assets Less drawings 600
16800
Stock 500
Debtors 800 1300 Current liabilities
Creditors 1200
Bank overdraft 300
1500
18300
18300