Question One

The following balances were extracted from the books of Wamu Traders Ltd.as at 30 September 2017:

Sh

Sh.

Ordinary shares of Sh.20 each. Fully paid

600,000

8% preference shares Sh.20 each. Fully paid

100,000

Share premium account

80,000

6-o loan stock

100,000

Trade creditors

I48,000

Trade debtors

330,000

Sales

4,800,000

Purchases

4,220,000

Discounts allowed

5,000

Discounts received

13,000

Freehold buildings:

At cost

500,000

Provision for depreciation

50,000

Fixtures and fittings:

At cost

640,000

Provision for depreciation

256,000

Stock I October 2016

420.000

Returns outwards

80,000

Establishment expenses

130,000

Administration expenses

56,000

Selling and distribution expenses

167,000

Bad debts written off

4,000

Provision for doubtful debts

18,000

Retained profit I October 2016

362,000

Goodwill

160,000

Bank overdraft

25,000

The following additional information is available:

1.

Depreciation is provided annually on the cost of fixed assets held at the end of the financial

year at the following rate:

Freehold buildings

20%

Fixtures and fittings

10%

2.

The trade debtors balance includes Sh. 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.

3.

The provision for doubtful debts as at 30 September 2017 is to be 5,% of trade debtors

4.

Establishment expenses prepaid at 30 September 2017 amounted to Sh.4,000.

5. Administration expenses accrued at 30 September 2017 amounted to Sh.7.000.

6.

The company paid the interest on the loan stock for the year, ended 30 September 2000 on 30

October 2017.

7. Closing stock was valued at Sh.560,000.

8.

The company's directors propose that the preference share dividend be paid and a

dividend of 10%

the

ordinary shares he paid.

Required:

(i)

Trading and profit and loss account and appropriation account for the year ended 30 September

2017 of Wamu Traders Ltd.

(8 marks)

(ii)

Balance sheet as at 30 September 2017.

(7 marks)