QUESTION ONE

The following balances were extracted from the books of Chiponde Investment Ltd on 31 December 2020.

	Dr	Cr
Purchases Sales Inventories at 1 January 2020 Distribution costs Electricity Telephone Irrecoverable debt expense Allowance for receivables at 1 January 2020 Wages Directors remuneration Administration expenses Dividends paid Equity Share capital (K1 shares) 5% Loan stock Retained earnings at 1 January 2020 Fixtures and Fittings at cost Fixtures and Fittings, accumulated depreciation at 01- Jan-2020 Motor vehicles at cost	K 283,000	K 495,000 840 50,000 25,000 23,700 43,700
	18,000 22,000 9,500 1,600 1,200 84,500 32,000 40,880 5,200 98,200 64,000
Motor Vehicles, accumulated depreciation at 01-Jan-2020 Trade receivables Trade payables Bank VAT payable	55,400	18,500 57,300 1,000 600
Cash	160	_______
	715,640	715,640

Additional information:

1. Inventories at 31 December 2020 was valued at K18, 226.
2. Directors bonuses for the year ended 31 December 2020 calculated at K1, 160 have not been accounted for.
3. Distribution costs include a payment of K3, 750 for rent for the three months to 28 February 2020.
4. The companys depreciation policies are as follows:

• Fixtures and Fittings Straight line over 5 years.
• Motor vehicles Reducing balance method at 20% per year.
• All non-current asset residual values are estimated at zero.

v) The company reviewed the trade receivables at 31 December 2020, and the following adjustments are required:

• Irrecoverable debts of K450 in addition to those already written off.
• Specific allowance for receivables of K650.
• General allowance of 3% against the remaining receivables.

Required:

1. Prepare a Statement of Profit or Loss account for Chiponde Ltd for the year ended 31 December 2020.

2. Prepare a Statement of Financial Position for Chiponde Ltd as at 31 December 2020.