QUESTION TWO (Based on Company Accounts with Adjustments)

The following balances have been extracted from the records of AfriFace Beauty Products Limited for the tear ended 31^st October 2022.

	Sh. 000	Sh. 000
Authorized and issued ordinary 2 million shares of Sh. 10 each		20,000
4 million 5% preference shares of Sh. 5 each		20,000
Retained profits as at 1st November 2022		4,600
20% debentures		5,400
Inventory as at 1st November 2021	4,000
Sales		89,000
Returns	1,000	1,360
Discounts	400	1,600
Carriage inwards	2,800
Purchases	64,000
Salaries and wages	23,810
Preference dividends paid	250
General reserves		10,000
Rate and rates	5,000
Freehold land and buildings (land Sh. 3,000,000)	7,000
Provision for depreciation: Buildings		200
Delivery vans		2,000
Delivery vans at cost	8,000
Sales proceeds of delivery van		800
Cash at bank	20,000
Instalment tax paid	1,260
Sales and distribution expenses	4,000
Directors fees	500
Audit fees	400
Debenture interest	540
Debtors and creditors	6,000	4,000
Bad debts	10,000
	158,960	158,960

Additional Information:

1. Closing inventory as of 31^st October 2022 was Sh. 14 million.
2. One of the debtors who owes Sh. 1 million has been declared bankrupt and it has been decided to write off this debt.
3. Salaries and wages have been prepaid to the extent of Sh. 810,000 on 31^st October 2022, while unpaid rates at the same date amounted to Sh. 1 million.
4. Thew auditors fees for the current year amounts to Sh. 740,000
5. Depreciation on buildings is provided at the rate of 2 % per annum on straight line basis, while that of delivery vans is at the rate of 4% per annum on cost.
6. It has been decided to write back Sh. 10 million from the general reserve to the statement of comprehensive income to facilitate payment of dividends.
7. The directors propose to pay ordinary dividends at the rate of 4% and the remaining as preference dividends.
8. During the year, a deliver van whose cost was Sh. 1 million with accumulated depreciation of Sh. 150,000 was sold for Sh. 800,000.
9. The cost of land is to be revalued upwards by Sh. 3 million on 31^st October 2022.

Required:

1. Statement of Comprehensive Income for the year ended 31^st October 2022 (8 Marks)
2. Statement of Changes in Equity for the year ended 31^st October 2022 (5 Marks)
3. Statement of Financial Position as of 31^st December 2022 (7 Marks)