Question
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
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:
- Inventories at 31 December 2020 was valued at K18, 226.
- Directors bonuses for the year ended 31 December 2020 calculated at K1, 160 have not been accounted for.
- Distribution costs include a payment of K3, 750 for rent for the three months to 28 February 2020.
- The companys depreciation policies are as follows:
- Fixtures and Fittings Straight line over 5 years.
- Motor vehicles Reducing balance method at 20% per
annum.
- 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:
- Prepare a Statement of Profit or Loss account for Chiponde Ltd for the year ended 31 December 2020.
- Prepare a Statement of Financial Position for Chiponde Ltd as at 31 December 2020.
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