The following trial balance has been extracted from the books of Kcitli Ltd as at 30 June 2016:

Additional information:

1. Inventory at 30 June 2016 valued at cost amounted to 155,000
2. Depreciation is to be provided on machinery and vehicles using a straight-line method at a rate of 20 percent and 25 percent respectively.
3. Provision is to be made for auditors fees of 12,000.
4. Insurance paid in advance on 30 June 2016 amounted to 5,000.
5. The provision for doubtful debts is to be made equal to 5percent o1 outstanding trades receivables as at 30 June 2016.
6. Interest on the bank loan is at 10 percent and will be paid after 30 June 2016.

1. Prepare KeithLtds statement of profit and loss for the year to 30 June 2016.
2. Prepare KeithLtds statement of financial position as at 30 June 2016.
3. Explain the importance of the statement of financial position to the users of financial statements. Show all your workings.

r. r. 000 000 Advertisin 30 Cash Trades payables 69 70 Bank loan Trades receivables 300 Electricit 28 17 Insurance prepaid at 1 July 2015 420 Machinery cost 152 Machinery accumulated depreciation at 1 July 2015 Office expenses Share capital 49 250 Dividends 4 Profit and loss account at 1 July 2015 132 Provision for doubtful debts Purchases 1,240 75 Rent and rates Sales 2,100 134 Inventory at 1 July 2015 Vehicles cost 80 Vehicles accumulated depreciation at 1 July 2015 40 413 Wages and salaries 2,821 2,821