Komakech is a new accounting recruit at Bombardier Trading & Co Certified Public Accountants. He has been undergoing a rigorous training and orientation exercise at the firm. A client of the firm, Kimpe Industries whose Accountant left abruptly for greener pastures, has brought a list of account balances to aid in the preparation of the final accounts of the Company. This assignment has been referred to Komakech to test his financial accounting skills.

The list of account balances as at 31^st December 2020 is shown below.

DrCr

Shs'000shs'000

Revenue28,600

Purchases18,000

Opening inventory (1^st January 2020)4,500

Storage costs850

Sales persons Salaries and commissions200

Administrative Salaries3,070

General Administrative expenses580

General distribution expenses490

Directors remuneration870

Loan interest paid100

Dividends: interim dividend paid40

Non current assets: cost18,000

Accumulated Depreciation 1 Jan. 20203,900

Trade accounts Receivable and Payable6,9003,800

Provision for doubtful debts as at 1^st Jan. 2020200

Balance at bank2,080

10% loan (repayable 2025)1,000

Issued share capital(4million ordinary shares4,000

Share premium account1,300

Retained profit 1^st Jan. 2020 8,720

53,60053,600

The following information is also available

(i)Inventory as at 31^st December 2020 amounted to shs 3,000,000.

A review of the trade accounts receivable total of shs. 6,900,000 shows that debts totaling 400,000/= should be written as bad debts. A provision for doubtful debts should be adjusted to 2% of the remaining balance for receivables.

Depreciation should be charged at 10% per annum on the cost at the year end.

The directors propose a final dividend of 0.04/= per share on the shares in issue at the end of the year.

Required:

Q.1.

(a)Prepare Kimpe Industries' SOCE for the year ended 31^st Dec. 2020.

(8marks)

(b)Discuss the reasons various stakeholders may be interested in the accounts of

Kimpe Industries showing, for each of them, their information needs.

(8marks)

Explain, how in your view 'you would treat a bad debt that had been written off

and the debtor resurfaces and pays towards the end of accounting period?

(6marks)

(d)Evaluate four major ways through which a company like Kimpe Industries can

raise capital for expansion purposes(6 marks)

(e)Prepare Kimpe Industries' SOFP as at 31^st December 2020.

(8marks)

(f)Identify areas in the published accounts that need improvement and your suggestions

for better presentation of financial statements. (6 marks)

(g)What relationship exist among the Full set of Financial statements as per IAS 1?

(6 Marks)

(h)Explain the rationale of the Accounting Equation to the various beneficiaries of

Accounting information as per IFRS.(2marks)

Total 50marks

Q.2.

One item is omitted in each of the following summaries of balance sheet and income statement datafor 2 companies A and B.

Particulars

Company A

(UGX)

Company B

(UGX)

At the beginning of the year

Assets

270,000,000

70,000,000

Liabilities

160,000,000

35,000,000

End of the year:

Assets

315,000,000

95,000,000

Liabilities

185,000,000

25,000,000

During the year:

Additional Capital

a

12,000,000

Withdraw

20,000,000

180,000,000

Total Revenue

87,750,000

b

Total expenses

72,750,000

32,000,000

a)Determine the amount of the missing figures shown by letters a and b(7 marks)

b)Using your knowledge acquired in this course, how would you explain the destination of cash and cash equivalents?(5marks)

c)With reference to the relevant accounting standard, describe the requirements and rationale of presenting cash flow statements in Advance accounting.(5marks)

d)Explain how you would treat events that happen after balance sheet as per IAS 10 with clear illustrations.(8marks)

Total 25 marks

Q.3.

a) Using the knowledge you have acquired in this course and as per guidance from IAS I and

IPSAS 1, what would you consider a complete final Accounts ready for publication? (5marks)

b) State what you would expect to find on the face of general financial statements.(6marks)

c) Explain how you would interprete Financial statements to the different users of accounting

information with illustrations.(6marks)

d) As per IAS 16: PPE, how would you recognize your company's assets that were acquired with

the intention of generating Revenue (4marks)

(e) Explain how you would treat a provision as per guidance of IAS 37for legal suit by a former

staff whose job was terminated?(4marks)

Total 25 marks