The following balances were extracted from the books of Softi Enterprise, a soft drink distributor in Nima at 31st December 2020.

Capital (1/1/2020) 2,372,000

Drawings 1,000,000

Sundry creditors 1,040,000

20% long-term loan 950,000

Interest on loan paid 95,000

Cash-in-hand 5,000

Bank 265,000

Sundry debtor 2,000,000

Bad debts 52,000

Provision for doubtful debts (1/1/2020) 71,000

Business premises (cost) 1,200,000

Equipment and furniture at cost 800,000

Provision for depreciation (1/1/2020)

Business premises

Equipment and furniture

90,000

240,000

Investment in 10% government Bond 500,000

Investment income received 25,000

Cost of goods sold 5,190,000

Stock-in-trade (31/12/2020) 510,000

Sales 10,624,000

Return inwards 710,000

Carriage outwards 200,000

General expenses 467,000

Rent and rates 322,000

Salaries and wages 2,150,000

Discount received 110,000

Discount allowed 56,000

The following additional information is relevant:

The long-term loan was contracted, and the investment made at the beginning of the 2020 financial year.

Depreciates business premises at 212% and equipment and furniture 10% (both on cost).

Provision for doubtful debts is to be adjusted to 5% of debts.

General expenses of 33,000 is accrued and rent and rates of 72,000 is prepared at 31/12/2020

In November 2020, Softi used some quantity of the drink valued 90,000 at cost for her Uncles funeral. This was not recorded anywhere in the books.

Included in the salaries and wages is an amount of 150,000 paid to workers employed to renovate the proprietors private residence and 500,000 paid to her husband for serving as sales Manager of the business.

You are required to prepare:

(i)The Income Statement for the year ended 31/12/2020. ( 10 marks)

(ii)Statement of Financial Position as at 31/12/2020. (10 marks)

(b). Fabrics are sold on cash basis while footwear is sold on both cash and credit basis. The following balances were extracted from the books of Mambo Enterprise for the year ended 30th June 2020.

DR

CR

Capital 756,000

Drawings 142,500

Fixtures and fittings (cost 160,000) 120,000

Motor vehicle (bought on 1st January, 2020) 480,000

Purchases: Fabrics

Footwear 450,000

830,000

Sales: Fabrics

Footwear 600,000

1,200,000

Debtors and Creditors 46,500 70,000

Salaries and wages 315,000

Rent and rates 50,000

Motor vehicle expenses 32,500

Electricity 50,000

Cash 22,500

Stock-in-trade (1st July, 2019) Fabrics

Footwear 32,000

50,000

________

2,631,000 2,631,000

Additional information:

Provision for doubtful debts should be created at 10% of debtors.

Stock at 30th June 2020 were: Fabrics 96,000, Footwear 130,000.

Fixtures and fittings should be depreciated at 10% on cost and Motor vehicle at 20% on cost per annum.

The floor are occupied by the fabric is 12 square metres and that of the footwear is 18 square metres;

Expenses are to allocated between the departments on the following basis

Expenses Basis

Rent and rates: Electricity Floor area

Salaries and wages Turnover

Motor vehicle expenses:

Depreciation of Fixed Assets Equally

You are required to prepare:

(i)Income Statements in columnar form for each department for the year ended 30th June, 2020.