- QUESTION TWO (a) John Phiri's business has an accounting year end of 31 December 2018. He rents factory space at a rental cost of K5, 000 per quarter, payable in arrears. During the year to 31 December 2018 his cash payments of rent have been as follows: 31 March (for the quarter to 31 March 2018) K5,000 29 June (for the quarter to 30 June 2018) K5,000 2 October (for the quarter to 30 September 2018) K5, 000 The final payment due on 31 December 2018 for the quarter to that date was not paid until 4 January 2019. Required: Show the ledger accounts required to record the above transactions. [5 Marks) (b) Alex Mukanta pays the rental expense on his market stall in advance. He starts business on 1 January 2019 and on that date pays K1,200 in respect of the first quarter's rent. During his first year of trade he also pays the following amounts: 3 March (in respect of the quarter ended 30 June) K1,200 14 June (in respect of the quarter ended 30 September) K1,200 25 September (in respect of the quarter K1,400 ended 31 December) 13 December (in respect of the first quarter Required: Calculate the balance carried forward as at 31 December 2019. [5 Marks) (c) On 1 January 2019, Willy Mossop owed K2,000 in respect of the previous year's electricity. Willy made the following payments during the year ended 31 December 2019: 6 February K2,800 8 May K3,000 5 August K2,750 10 November K3,100 At 31 December 2019, Willy calculated that he owed K1,800 in respect of electricity for the last part of the year. Required: Calculate the electricity charge to be included in the income statement. [5 Marks) (d) Describe what a cash flow statement is and explain the importance of a cash flow statement [10 Marks] [Total: 25 Marks]