The trial balance of Zach Ltd. as at 3I December 1999 was as follows:

Sh.

Sh.

Share capital (10,000 Sh.20 Ordinary shares)

200,000

Purchases and Sales

1,220,000

2,000,000

Debtors and Creditors

400,000

140,000

Profit and loss 1 January 1999

380,000

Sales returns

40,000

Buildings at cost

800,000

Plant at cost

1,000,000

Provision for depreciation:

Plant

400,000

Buildings

40,000

Purchases returns

80,000

Selling expenses

140,000

Bank

160,000

10% Debentures

600,000

Stock 1 January 1999

300,000

Provision for bad debts

20,000

Operating expenses

180,000

Administrative expenses

140,000

Suspense account

_______

200,000

4,220,000

4,220,000

Additional information:

1.Stock at 31 December 1999 was Sh.360,000.

2.Sales returns of Sh.20,000 have been entered in the sales day book as if they were sales. When this error was discovered, the debtors account had been corrected but the sales figure was not rectified.

3.5000 new shares were issued during the year at Sh.32. The proceeds have been credited to the suspense account.

4.A fully depreciated plant which cost Sh.200,000 was sold during the year. No other entries except bank have been made. The remaining balance on the suspense account after (2 and 3) above represents the sale proceeds.

5.A debtor of Sh.20,000 has been declared bankrupt. A general provision is required at 5% of debtors.

6.Rates of Sh.30,000 paid in December covering half year to 31 March 2000 have not been entered in the books.

7.Debenture interest has not been paid.

8.Depreciation on plant is at 10% on cost and buildings at 2% on cost.

9.The directors propose to pay a dividend of Sh.2 per share and transfer Sh.20,000 to the general reserve.

10.Corporation tax at a rate of 32'/₂% on profits is estimated to be Sh.90,000.

Required:

(a)Suspense account for the year ended 3I December 1999 (3 marks)

(b)Trading,profit and loss account for the year ended 31December1999. (10 marks)

(c) Balance sheet as at 3 1 December 1999.