QUESTION ONE (TO BE ATTEMPTED BY EVERYONE)

a) Using your organisation (or an organisation of your choice) identify stages in the accounting cycle that is followed leading to the extraction of a trial balance.

b)

The Trial balance of BJ Ltd as at 31 December 2021 was as follows:

Dr Cr

K000 K000

Turnover 850

Purchases 450

Inventory at 1 January, 2021 80

Distribution costs 80

Administration expenses 105

Returns inwards 5

Receivables 150

Payables 32

Returns outwards 3

Carriage inwards 10

Cash at bank 85

Carriage outwards 2

Ordinary shares 50 ngwee per share 100

10% redeemable preference shares K1 90

10% loan notes 80

Non-current assets at cost 368

Accumulated depreciation 1 January, 2021 140

Share premium 30

Retained profits at 1 January, 2021 30

Loan note Interest 4

Interim preference dividend 6

Interim ordinary dividend 10

1,355 1,355

The following is to be taken into account.

i) The depreciation is charged on non-current assets at the rate of 20% on a reducing balance basis per year. Depreciation is charged to the administrative expenses. Corporate tax payable is at the rate of 30% per year.

ii) Rent paid in advance amounting to K5, 000 was charged to administrative expenses.

iii) There is an outstanding transport cost amounting to K4, 000. Transport costs are charged to the distribution costs.

iv) Final ordinary dividend of 20 ngwee per share is proposed.

v) Closing inventory is K40, 000.

Required:

a) Prepare the statement of profit or loss and other comprehensive income for the year ended 31^st December 2021.

b) Prepare the statement of Financial Position as at 31^st December, 2021.