Kingstown Ltd (Kingstown) is a sportswear distributor. The following is the

companys trial balance as at 31 October 2013: Trial Balance as at 31October

Purchases

Sales Revenue

Inventories at 1 November 2012 [note (i)] Distribution costs

Other operating income

Salaries

Motor expenses

Lighting and heating [note (ii)]

Rent and rates

General expenses

Telephone and internet

Irrecoverable receivables

Provision for doubtful receivables [note (v)] Share capital

8% debenture loan [note(vi)]

Premises at cost [note (iv)]

Premises provision for depreciation Equipment at cost [note (iv)]

GH000 GH000 1,400

2,347 203

87

100

499

63

129

44

63

70

15

306

103

350

2 903 100

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Equipment provision for depreciation 130 Vehicles at cost 330

Vehicles provision for depreciation [note (iv)] 90 Bank 120

Accounts payable 110

Accounts receivable [note (iii)]

206 - 3,885 3,885

You are given the following additional information:

(i) Inventories at 31 October 2013 were valued at GH230,000. Included in that total are some branded inventory promoting the 2013 World Summer Games. This inventory was purchased on 15 January 2013 for GH27,000. It is estimated that the inventory now has a realisable value of around GH5,000.

(ii) Heating expenses included a bill for GH66,000 for the six months from 1 July 2013.

(iii) An accounts receivable of GH8,000 has been confirmed as irrecoverable.

(iv) Depreciation is to be charged as follows:

On premises on a straight line basis over 20 years.

On equipment on a 15% reducing balance basis.

On vehicles on a 10% reducing balance basis.

(v) The provision for doubtful receivables is to be made equal to 5% of the receivables as at the end of the year.

(vi) The debenture interest due for 2012/13 has not been paid or accrued. (vii) Estimated current tax liability is GH1,000.

(viii) All operating expenses should be classified as administrative expenses except: 100% of distribution costs, and 40% of rent and rates, light and heat and general expenses, which should be classified as selling and distribution costs.

Required:

Prepare the Income Statement of Kingstown for the year to 31 October 2013 and the Statement of Financial Position of Kingstown as at 31 October 2013.

Note: All workings should be clearly shown.

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