The following balances were extracted from the books of Chanda at 31/12/19

K

Buildings at cost 240,000

Plant at cost 160,000

Accumulated Depreciation a 01/01/19

• On buildings 40,000
• On Plant 76,000

Purchases 500,000

Sales 808,800

Inventory at 01/01/19 100,000

Discounts allowed 36,000

Discounts Received 9,600

Returns inwards 4,400

Returns outwards 30,000

Wages and salaries 117,600

Bad debts written off 9,200

Other expenses 45,600

Trade Receivables 76,000

Trade Payables 72,000

10% Loan 20,000

Cash 3,200

Drawings 48,000

Provision for doubtful debts 1,000

Opening capital ?

Additional information

1. Closing inventories K84,000
2. Wages and salaries accrued amount to K1,600
3. Other expenses prepaid amount to K600
4. The provision for bad and doubtful debts is to be adjusted to 2 percent of trade receivables.
5. The loan was taken on July 1 2019
6. Depreciation for the year is to be calculated as follows:

• Buildings,1.5% per annum straight line
• Plant,25% per annum reducing balance

Required:

1. Extract a trial balance and find capital
2. Prepare a statement of Profit or Loss
3. Prepare a statement of Financial Position.
4. Calculate and interprete the following ratios

1. Gross Profit Margin (GPM)
2. Net Profit Margin (NPM)
3. Return on Capital Employed (ROCE)
4. Current ratio
5. Acid test ratio
6. Receivables days
7. Payables days
8. Inventory days
9. Asset turnover
10. Gearing Ratio