Qustions:

Required: (a) Statement of distribution of cash received. (6 marks) (b) Partner's capital accounts showing balances as at 31 March 2006 and 15 May 2006. (10 marks) (c) Realization account. (2 marks) (d) Bank account. (2 marks) (Total: 20 Marks)NUMBER TWO Jip ,Kim and Timo were partners in JKT Enterprises. The partnership manufactured items of equipment which were hired out for outdoor activities. They shared profit and losses equally after providing for interest on their capital balances, at the beginning of the year, at the rate if 5% per annum. The trial balance extracted from the partnership's books of account as at December 2005 was as follows: Sh.'000' Sh.'000' Non current assets 980 Joint life assurance policies 300 Cash ns cash equivalents 600 Stock of raw materials 970 Accounts payable 770 Accounts receivable 400 Capital accounts: Jip 520 Kim 260 Timo 240 Joint life assurance fund 300 Customer deposits 820 Work-in-progress 860 3.510 3.510 Additional information 1 Due to some disagreement on the running of the firm, the partners decided to dissolve the partnership on 31 March 2006 after the following events had taken place. Sh. Credit purchases of raw materials 202,500 Raw materials used in production 357,500 Direct wages paid 780,000 Payment to suppliers of raw materials 450,000 Credit sales of finished goods 2,800,000 Cash received from credit customers 2,250,000 Payment for general expenses 1,596,500 Cash drawings: Jip 260,000 Kim 150,000 Timo 140,000 Joint life assurance policies premium amounting to Sh. 60,000 was on 15 February 2006. The policies covered the lives of the three partners. 3 Customers were required to pay a deposit for special orders. As at 31 March 2006, all goods relating to special orders had been supplied by the partners. Work-in-progress as at 31 March was valued at Sh. 457,000." UI + The partnership ceased operations on31 March 2006 with Jip taking over a motor vehicle at a valuation of Sh. 106,000. The other assets were sold and realized on piecemeal basis. Any cash available was distributed immediately. The assets were realized as follows: Date Asset Amount(Sh.) 31 March 2006 Joint life assurance policies 450,000 15 April 2006 Accounts receivable (part) 280,000 15 April 2006 Raw materials (part) 850,000 30 April 2006 Accounts receivable 585,000 30 April 2006 Raw materials and work -in-progress 1,207,000 15 March 2006 Non-current assets 1,050,000206. The revaluation reserves in Bomen Limited were due to the revaluation of the investments in Rica Limited was fully impaired. 2 Rica limited acquired 30 million ordinary shares in Sting Limited on 30 September 2005. The fair values of the as assets of Sting Limited as at 30 September 2005 were as follows: Asset Excess of fair value over book value sh. 'million' Plant and machinery 60 Patents and copyrights (not carried in books) 10 Inventory 20 The group depreciates plant and machinery at 10% per annum while intangible assets are amortised at 20% per annum (proportionate charge is used as necessary). Only 20% of the inventory held by stone Limited as at 30 September 2005 was still in stock as at 31 March 2006. 3 As at 31 March 2006, Bomen Limited and Rica Limited owed Sting Limited Sh. 36 million and Sh. 32 million respectively as a result of inter-company trading. Sting Limited made a profit after tax of Sh. 240 million in the year ended 31 March 2006. 4 Bomen Limited and Rica Limited had nor accounted for dividend receivable. All the dividend were proposed before 31 March 2006. 5 The directors of Bomen Limited consider the goodwill arising on acquisition of Sting Limited to be impaired by 1/6 of the initial value. Required: Group balance sheet as at 31 March 2006 in accordance with the relevant International Financial Reporting Standards (IFRSs) (25 Marks)NUMBER ONE The draft balance sheets of Bomen Limited, Rica Limited and Sting Limited as at 31 March 2006 were as follows: Bomen Limited Rica Limited Sting Limited Non current assets: Sh. 'million' Sh. 'million Sh. 'million Property, plant and equipment 1,280 920 700 Investment in Rock Limited (valuation) 900 Investment in Stone Limited (Cost) 750 2,180 1,670 700 Current assets: Inventories 420 410 240 Trade receivables 680 540 390 Cash atr bank 80 90 70 1,180 1,040 700 Total assets 3,360 2,710 1.400 Equity and liabilities: Ordinary share capital of Sh.10 each 600 500 500 Revaluation reserves 60 260 Retained earnings 1,970 1,300 480 2,630 2,060 980 Current liabilities: Trade payables 390 380 210 Current tax 40 20 10 Proposed dividend 300 250 200 730 650 420 Total equity and liabilities 3,360 2,710 1,400 Additional information: Bomen Limited purchased 30 million ordinary shares in Rica Limited on 1 April 2000, when the balance of retained earnings in Rica Limited was Sh. 800 million and the fair values of the new assets of Rica Limited were the same as the book values. The revaluation reserves in Rica Limited arose from the revaluation of assets carried out in the year ended 31 March