You have been asked to prepare the final accounts for Peter Barare, a sole trader, for the year ended 31 December 2020 W Smith has forwarded to you all books of prime entry and ledgers, and in addition has given you the following information Mr Smith had taken Kshs200,000 out of the business bank account to take his wife on holiday Up to last year the machinery and vehicle used in the business had been depreciated using the reducing balance method Peter Barare thinks that they should now be depreciated using the straight line method Mr Barare is confident, given his order book, that the business will continue to operate in its present form for many years Mr Barare had purchased ten staplers, four flip charts and four packets of whiteboard markers which will be used in the business for the next couple of years Mr Barare informs you that he has just found an unopened electricity bill for Kshs90,000 which was for the quarter October to December 2020 Required In each case, identify and then explain the main accounting concepts being highlighted and indicate how each should be treated in the final accounts (5 marks)

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You have been asked to prepare the final accounts for Peter Barare, a sole trader, for the year ended 31 December 2020. W Smith has

You have been asked to prepare the final accounts for Peter Barare, a sole trader, for the year ended 31 December 2020. W Smith has forwarded to you all books of prime entry and ledgers, and in addition has given you the following information:

Mr. Smith had taken Kshs200,000 out of the business bank account to take his wife on holiday.
Up to last year the machinery and vehicle used in the business had been depreciated using the reducing balance method. Peter Barare thinks that they should now be depreciated using the straight line method.
Mr. Barare is confident, given his order book, that the business will continue to operate in its present form for many years.
Mr. Barare had purchased ten staplers, four flip charts and four packets of whiteboard markers which will be used in the business for the next couple of years.
Mr. Barare informs you that he has just found an unopened electricity bill for Kshs90,000 which was for the quarter October to December 2020.

Required:

In each case, identify and then explain the main accounting concepts being highlighted and indicate how each should be treated in the final accounts. (5 marks)