Question Four

The following balances were extracted from the books of Waumini Ltd as at $30$ September $2021$:

KES

Ordinary shares of KES. $20$ each. Fully paid

$8\%$ preference shares KES. $20$ each. Fully paid

Share premium account

$6\%$ loan stock

Trade creditors

Trade debtors

Sales

Purchases

Discounts allowed

Discounts received

Freehold buildings:

At cost

Provision for depreciation

Fixtures and fittings:

At cost

Provision for depreciation

Stock I October $2020$

Returns outwards

Establishment expenses

Administration expenses

Selling and distribution expenses

Bad debts written off

Provision for doubtful debts

Retained profit I October $2020$

Goodwill

Bank overdraft

KES

$600,000$

$100,000$

$80,000$

$100,000$

I$48,000$

$330,000$

$4,800,000$

$4,220,000$

$5,000$

$13,000$

$500,000$

$50,000$

$640,000$

$256,000$

$420,000$

$80,000$

$130,000$

$56,000$

$167,000$

$4,000$

$18,000$

$362,000$

$160,000$

$25,000$

The following additional information is available:

Depreciation is provided annually on the cost of fixed assets held at the end of the financial year at the following rate: i$.$ Freehold buildings $20\%$ ii$.$ Fixtures and fittings $10\%$

The trade debtors balance includes KES. $10,000$ due from Musa who has now been declared bankrupt. In the circumstances, it has been decided to write the debt off as a bad debt.

$4$

The provision for doubtful debts as at $30$ September $2021$ is to be $5\%$ of trade debtors

Establishment expenses prepaid at $30$ September $2021$ amounted to KES $4,000.$

Administration expenses accrued at $30$ September $2021$ amounted to KES$\mathrm{.}7\mathrm{.}000.$

The company paid the interest on the loan stock for the year, ended $30$ September $2020$ on $30$ October $2021.$

Closing stock was valued at KES $560,000.$

It has been declared that the preference share dividend be paid and a dividend of $10\%$ of the ordinary shares he paid.