The following trial balance was extracted from the books of Dee & Dee Enterprises Ltd. as at 30 June 2021. Sh. “000” Sh.“000”
Freehold property at cost 35,000
Plan at cost 26,000
Accumulated depreciation on plant 12,400
Motor vehicles at cost 10,600
Accumulated depreciation on motor vehicles 6,100
Fixtures and fittings at cost 7,941
Accumulated depreciation on fixtures and fittings 2,358
Discounts received 493
15% debentures 40,000
Raw materials purchased 183,476
Sales 244,925
Sundry expenses 5,830
Bank charges 5850
Marketing expenses 4,609
Advertising expenses 1,716
Sales returns 269
Raw material purchases return 5899
Salaries 38,000
Plant maintenance 2,194
Lighting and heating 3,256
Factory power 4,512
Factory wages 21,674
Rates and Insurance 1,986
Bad debts 1,700
Allowance for bad debts 2,245
Share capital -1,000,000 ordinary shares of Sh.50 each 50,000
General reserve 54,000
Revenue reserve (Unappropriated profits) 881
Interim dividend paid 3,200
Cash at bank 6,714
Accounts receivable and accounts payable 26,409 11,647
Inventories at 1 July 2020- Raw materials 6,811
Work in progress 11,532
Finished goods 21,669
430,948 430,948

1. Freehold property includes land at a cost of Sh.15,000,000. The balance is for the cost of buildings.
2. Buildings are to be depreciated using the straight-line method over a fifty-year period commencing 1 July 2020. This expense is considered to be a factory overhead.
3. Depreciation is to be provided on a reducing balance basis as follows:

Asset Rate per annum
Plant 15%
Motor vehicles 25%
Fixtures and Fittings 10%
Only plant depreciation is charged to the factory. The other depreciation charges are considered administrative expenses.
4. Allowance for doubtful debts is be adjusted to 8% of the accounts receivable.
5. The following expenses are to be apportioned in the ratio 4:1 between factory and administrative overheads:
• Lighting and heating
• Rates and Insurance
• Sundry expenses
6. An amount of Sh. 6,000,000 included in the factory wages account is the finance manager’s salary.
7. Final proposed and approved final dividend which will bring the dividend for the year up to Sh.5 per share.
8. Debenture interest for the current year has not yet been paid.
9. Some finished goods which cost Sh. 541,000 have been sold to a customer at an additional profit margin of Sh. 57,000 but the customer has indicated that he intends to return them since they are not what he ordered. This sale was a credit sale and has been included in the accounts receivable.
10. As at 30 June 2021:
• Lighting and heating accrued was Sh.154,000.
• Insurance prepaid was Sh. 48,000.
• Rates prepaid was Sh.150,000.
11. Inventories as at 30 June 2021 were valued at:
Sh.“000”
• Raw materials 27,851
• Work in progress 16,490
• Finished goods 24,627
Required:
(a) Manufacturing account for the year ended 30 June 2021. (10 marks)
(b) Statement of profit or loss/income statement for the year ended 30 June 2021. (10 marks)
(C) Statement financial position as at 31 June 2021 (10 marks)