UESTION ONEThe trial balance of Zach Ltd. as at 3I December 1999 was as follows:Sh.Sh.Share capital (10,000 Sh.20 Ordinaryshares)200,000Purchases and Sales1,220,0002,000,000Debtors and Creditors400,000140,000Profit and loss 1 January 1999380,000Sales returns40,000Buildings at cost800,000Plant at cost1,000,000Provision for depreciation:Plant400,000Buildings40,000Purchases returns80,000Selling expenses140,000Bank160,00010% Debentures600,000Stock 1 January 1999300,000Provision for bad debts20,000Operating expenses180,000Administrative expenses140,000Suspense account_______200,0004,220,0004,220,000Additional information:1. Stock at 31 December 1999 was Sh.360,000.STRATHMOREUNIVERSITYREVISIONKIT

Introduction152.Sales returns of Sh.20,000 have been entered in the sales day bookas if they were sales. When this error was discovered, the debtorsaccount had been corrected but the sales figure was not rectified.3. 5000 new shares were issued during the year at Sh.32. Theproceeds 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 exceptbank have been made. The remaining balance on the suspense account after (2 and 3) aboverepresents the sale proceeds.5.A debtor of Sh.20,000 has been declared bankrupt. A general provision is required at 5% ofdebtors.6. Rates of Sh.30,000 paid in December covering half year to 31March 2000 have not been entered in the books.7. Debenture interest has not been paid.