QUESTION ONE The following trial balance was extracted from the books of Night Shade Limited as at 30 December, 2021 Sh.2000 Sh.'000 151,000 60,000 15,000 1,204.000 91,000 1,574,050 66,700 Land buildings Motor vehicles at cost Accumulated depreciation: motor vehicles (January 1, 2020) Purchases and sales Inventory (January 1, 2020) Revenue reserves General expenses Salaries and wages Electricity Bank balance Interim dividend paid Motor vehicles expenses Insurance Discount allowed and discount received Bad debts written off 2,325 244,150 5,600 42,200 7,000 4,475 7,150 10,900 3,050 8,300 136,500 2,400 100,700 Accounts receivable and accounts payable Debenture interest paid Ordinary shares sh.40 par value Share premium 8% Debentures Cash in hand Directors' fees 160,000 36,000 60,000 9,000 40,000 2.020.750 2.020.750 Additional information 1. Goods costing sh. 710,000 purchased on credit on 29 December 2021, were in transit and therefore had not been entered in the books by close of business on 30 December 2021. 2. Inventory as at 30 December 2021 was valued at sh.112,300,000 3. A debtor who owed the company sh.1,500,000 was declared bankrupt. His debt has not yet been written off. 4. Allowance for doubtful debts is to be set at 2% of the outstanding receivables 5. Depreciation is to be provided on motor vehicles at a rate of 20% per annum on cost 6. As at 31 December 2021, outstanding motor vehicles expenses amounted to sh.125,000 while prepaid insurance amounted to sh.1,150,000. 7. Invoices issued amounted to sh.950,000 had completely been omitted from the records as at 30 December 2021. 8. Provision is to be made for outstanding debenture interest and corporation tax of sh.22,975,000 9. The directors have proposed a final dividend of sh. 2.50 per share. Required a) Statement of income for the year ended 31 December 2021. (15 marks) b) Statement of financial position for the year ended 31 December 2021. (15 marks) TOTAL 30 MARKS