Question

KOMBE Ltd has the following balance sheets for years ended 31 December 2020 and 31 December 2021. KOMBE LIMITED Balance sheet as at 31 December 2020 K K K K Cost Accumulated Capital Non-current assets Depreciation Ordinary shares 350,000 Buildings 310,000 310,000 Redeemable 150,000 Plant 431,000 195,000 236,000 Preference shares Income statement 210,000 Vehicles 196,000 85,000 111,000 710,000 937,000 280,000 657,000Long-term liabilities Debentures 50,000 Investment in associate 120,000 Current Liabilities Current assets Taxation 70000 Stock 100,000 Dividend 40,000 Debtors 120,000 Creditors 110,000 Bills receivable 20,000 Bank overdraft 40,000 Cash in hand 3,000 260,000 243,000 1,020,000 1,020,000KOMBE LIMITED Balance Sheet as at 31 December 2021 Non-Current Accumulated Capital Asset Cost depreciation K K K K K Ordinary shares 350,000 Buildings 250,000 250,000 Capital redemption 150,000 Plant 460,000 287,000 173,000 Reserve fund Income statement 139,000 Vehicles 220,000 100,000 120,000 639,000 930,000 387,000 543,000 Long-term Liabilities Debentures 100,000 Investment in 140,000 Associate Loan to associate 40,000Current Liabilities Current assets Taxation 80,000 Inventory 120,000 Dividend 60,000 Debtors 170,000 Creditors 140,000 Bank balance 5,000 Cash in hand 1,000 280,000 296,000 1,019,000 1,019,000NOTES; 1 During the year a building was sold for K90,000 and motor vehicles costing K90,000 were sold for K40,000, a book loss of K10,000. New vehicles were bought for K114,000. 2 Depreciation is 20 per cent straight-line for plant, and 25 per cent straight-line for vehicles. 3 A K15,000 premiums on the redemption of preference shares was written off to P & L in the year. (a) Reconstruct the company's income statement for 2021. (b) Prepare a statement of cash flows in the formats required under FSB 1 and IAS 7 respectively