Question
The following trial balance relate to Lubuto company at 31 March 2022 Plant and Equipment at cost (iii) 155,500 Accumulated amortisation/ depreciation at 1 April
The following trial balance relate to Lubuto company at 31 March 2022 Plant and Equipment at cost (iii) 155,500 Accumulated amortisation/ depreciation at 1 April 2021 Right of use asset 25,000 Plant and Equipment 43,500 Right of use leased property at cost 100,000 Bank interest 900 Administration expenses 36,800 Distribution costs 33,500 Cost of sales 290,600 Loan note interest and dividends paid (notes(iv) and(v) 13,380 Revenue 490,000 Inventories at 31st March 2022 61,000 Trade received 63,000 Trade payables 32,200 Bank 5,500 Equity shares of 25ngwee each (notes ii) 56,000 Share premium 25,000 Retained earnings at 1 April 2021 26,080 5% convertible loan note (note iv) 50,000 Current tax note (vi) 3,200 Deferred tax (note (vi) 4,600 757,880 757,880 The following notes are relevant: (i) Revenue includes and amount of K20 million for cash sales made through Lubuto cos retail outlets during the year on behalf of francis. lubuto Co, acting as agent, is entitled to a commission of 10% of the selling price of these goods. By 31st March 2022, Lubuto Co had remitted to Francis K15million ( of the K20 million sales) and recorded this amount in cost of sales (ii) On 1st August 2021, Lubuto Co made a fully subscribed rights issue of equity share capital based on two new shares at 60 ngwee each for every five shares held. The issue has been fully recorded in the trial balance figures. (iii) Plant and equipment is depreciated at 12.5% per annum on the reducing balance basis. All amortisation and depreciation of non-current assets is charged to cost of sales. (iv) On 1 April 2021, Lubuto co issued a 5% K50 million convertible loan note at par. Interest is payable annually in arears on 31 March each year. The loan note is redeemable at par or convertible into equity shares at the option of the loan note holders on 31 March 2024. The interest on an equivalent loan note without the conversion rights would be 8% per annum. The present values of K1 received at the end of each year, based on discount rates of 5% and 8% are: 5% 8% End of year 1 0.95 0.93 2 0.91 0.86 3 0.86 0.79 (v) An equity dividend of 4ngwee per share was paid on 30 May 2021 and, after the rights issue, a further dividend of 2 ngwee per share was paid on30th November 2021. (vi) The balance on current tax represent represents the under/over provision of the tax liability for the year ended 31st March 2021. A provision of K28 million is required for current tax for the year ended 31st March 2022 and at this date the deferred tax liability was assessed at K8.3 million. Required (a) Prepare the statement of profit or loss for Lubuto for the year ended 31st March 2022. (12marks) (b) Prepare the statement of financial position for; Lubuto for the year ended 31 March 2022, (18 marks)
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