The following information was extracted from the records of rael ltd as at 31st October 2020: sh. ‘000’ sh. ‘000’ ordinary shares of sh.20 each 50,000
12% preference shares of sh.15 each 20,000 share premium 22,000
revaluation reserve 26,000
general reserve 14,000
retained profit b/f 18,000
6% debentures 12,000 sales 186,000 accounts receivable and accounts payable 20,000 16,200
inventory (1st nov 2019) 10,400
cost of sales 107,600
freehold land and buildings (land cost sh.60,000,000) 130,000
motor vehicles at a cost of 50,000
equipment at cost 25,000
accumulated depreciation (1st nov 2019): - buildings 2,400 - motor vehicles 8,000 - equipment 5,000
administrative expenses 13,800
sales and distribution costs 10,400
interest on debentures 600
discount received 1,600
bank balance 12,000
cash in hand 2,000
allowance for doubt full debts (1st nov 2019) 600 381,800 381,800
additional information:
1.administrative expenses paid in advance as at 31st October 2020 amounted to sh.800,000 and sales and distribution cost due as at 31st October 2020 amounted to sh. 600,000.
2. the bad debts written off were sh. 1,500,000. an allowance for doubtful debts is to be provided for at 6% of the remaining debtors
3. corporate tax is estimated at sh.4,000,000 4. depreciation is to be provided as follows: buildings 12% per annum straight line, motor vehicles 20% per annum straight line and equipment 20% per annum reducing balance 5. the directors have proposed the following: a dividend be paid to preference shareholders and a dividend of sh.2 per share to the ordinary shareholders.
required:
(a) statement of financial performance for the year ended 31st October 2020 (12 marks) (b) statement of financial position as at 31st October 2020