Question One The following Trial Balance was extracted from the books of Hillside Plc at 31 March 2006: K'000 KI 000 ordinary shares K'000 200 000 8% K1000 preference shares 70 000 7% debentures 100 000 Land and buildings cost 130 000 Accumulated depreciation on buildings on 1 April 2005 Plant and machinery (K348 million cost) 30 000 262 500 Motor vans at cost 140 000 Accumulated depreciation on vans on 1* April 2005 56 800 Profit and loss account b/f 20 000 Share premium account 60 200 Inventory at 1 April 2005 Sales Trade Receivables and Payables Bank Purchases Distribution costs General administration expenses Debenture interest 45 000 5.800 166 100 18.000 44 900 7.000 35 000 344 600 27000 Interim dividends: Ordinary Preference Allowance for doubtful debts Additional information available: 10 000 2 800 1500 890 100 890 100 1. During the year the following transpired in relation to motor vans: a) A new motor van was purchased on 1" January 2006 on credit ke K24 million. The amount was still due to the supplier on 31 March 2006. b) A motor van which had cost K16 million four years ago when new was sold for K6,6 million. The proceeds from the sale had not yet been received on 31 March 2006. None of the above matters had been recorded in the books of the company. 2. Depreciation on motor vans has been and is to be provided at the rate of 20% per annum on cost and is charged in full in the year of acquisition and none in the year of disposal. 3. The cost of buildings is K100 million. 4. Depreciation on buildings, and plant and machinery is to be charged as follows: Buildings Plant and machinery 2% on cost 10% on cost 5. On 31 March 2006 the company issued bonus shares to the ordinary shareholders on a one (1) to ten (10) basis. No entry relating to this has yet been made in the books. 6. Inventory at 31 March 2006 was valued at K51 million. 7. A hill for administrative expenses for K150 000 was unsettled as at 31 March 2006 8. Distribution costs include an insurance premium for delivery vans of K200 000 which relates to the period 1 July 2005 to 30 June 2006. 9. The allowance for doubtful debts is to be 2% of receivables outstanding on 31 March 2006. 10. The directors wish to provide for: a) A final ordinary dividend of 5% b) A final preference dividend. 11. Income tax for the year is estimated at K18 million Required: a) Using additional information (1) and (2), prepare the following ledger accounts i) Motor van account ii) Motor van accumulated depreciation account iii) Motor van disposal account (8 marks) b) Prepare the company's Income Statement for the year ended 31 March 2006 (12 marks) c) Prepare the company's Balance Sheet as at 31 March 2006 (15 marks)