GAG Ltd has nominated and agreed with you to prepare relevant reports using the data below.
Shs. (000)
Fleet of delivery vehicles, after deducting depreciation 90,000
Furniture and fittings, after deducting depreciation 60,000 Trade receivables 80,000
Bank deposit 150,000
Creditors 30,000
Ordinary Share Capital 210,000
10% Debentures 100,000
Bank Loans 40,000
On 1 October 2021 management of the company issued additional 30,000 ordinary shares of Shs. 3,000; and 50,000 13% Debenture of Shs. 1,000 each and received all the cash duly banked. The manager of GAG Ltd has a personal business named “Gag Ent.” where he is suspecting that the in-charge officer is stealing her money and provides you with the data below:
Balances Brought Forward (Shs. ‘000’)
Motor Vehicles 100,000 Cash Balance 100,000
Furniture and fittings, 120,000 Capital ?
Trade receivables 40,000 Additional Capital 160,000
Bank Balance 60,000 Prepaid Insurance 50,000
Inventory at Close 5,000 Umeme Bills Due 30,000
Creditors 80,000 Unpaid Salaries 30,000
Motor Vehicles 190,000 Outstanding Rent 20,000
Bank Loans 140,000 Machinery 250,000
Transactions during the year (Shs. ‘000’)
Sales 670,000 Discount Received 15,000
Purchases 340,000 Discount Allowed 20,000
Transport on Purchases 4,000 Repairs 2,000
General Office Expenses 5,000 Insurance Costs 18,000
Payment – Trade Payables 120,000 Auditing 25,000
Receipts -Trade Receivables 180,000 Interest on Loan 19,000

Required
a) Explain reasons why partnership business Revaluation Accounts. (5marks)
b) Discuss the principles of internal control related to cash receipts. (6 marks)
c) Prepare a statement of:
(i) Affairs at start for the manager’s personal business. (2 marks)
(ii) Profit or loss for the year ended 30 November 2021. (8 marks)
d) Analyse benefits and limitations of equity and debt capital to GAG Ltd. (4 Marks)