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Shareholders funds688,990Non current liabilities8% debentures20,000Deferred tax1,20021,200710190Current liabilitiesTrade creditors102,000Tax payable (11,820 –8,615)3,205Accrued directors‟ fee150,000255,205TOTAL EQUITY AND LIABILITIES965395Workings1.TurnoverSh.‟000‟As per trial balance1,191,864Less proceeds and disposals(1,215)1,190,6492.Selling and distribution costs As per TB78,840Motor vehicle expenses59,864Wages25,000Depreciation: Motor vehicle12,580FINANCIAL REPORTING
Past Papers Questions and Answers155176,1043.Administrative expensesWages and salaries70,834As per TB11,492Audit fees1,400Depreciation: fixtures1,040Compensation of director for loss of office8,500Provision for doubtful debts (16,822 –14,400)2,422Director‟s fee150,000245,6884.Profit on assets disposed MotorFixtures &TotalCostvehiclesFittings4,255Acc. Dep.2,8001,4553,055NBV2,1509051,200Proceeds6505501,215Profit & Loss7155006,500DEFERRED TAX A/CSh.‟000‟Sh.‟000‟Profit U Loss1,800Bal c/d (30% x 4,000)1,200Bal b/d3,0003,0003,000Notes to the accountsNote 1 Accounting policiesThese financial statements have been prepared under the historical cost basis of accounting which is modified to accommodate the revaluation of certain properties and in accordance with the applicable IFRSs.Property plant and equipment is shown at cost or revalued amount less the total accumultaed depreciation, which is based on the estimated useful life of the assets.Inventory has been stated at the lower of cost and net relisable value.Note 2 Profit before taxThe profit before tax has been arrived at after charging the following expensesSh.‟000‟Directors fee205,000Compensation to director for loss of office8,500Depreciation13,650Auditors fee1,400Staff costs40,834KASNEB PANEL● REVISIONKIT
156Answers –Past PapersNote 3 TaxationCorporation tax is based on the adjusted profits for tax purpose at a corporation tax rate of 30%Note 4 Propety plant and equipmentFreehold landMotorFixtures &COST/VALUATION& BuildingsvehiclesFittingsTotalSh.‟000‟Sh.‟000‟Sh.‟000‟Sh.‟000‟Bal as at 01.04.01270,00048,96019,200338,160Additions-2,2401,6003,840Disposals-(2,800)(1,455)(4,255)Revaluations30,000--30,000Bal as at 31.03.02300,00048,40019,345367,745Accumulated DepreciationBal as at 01.04.01-13,8208,46022,280Eliminated on disposal-(2,150)(905)(3,055)Charge for the year-12,5801,04013,650Bal as at 31.03.02-24,2508,59532,845NBV as at 31.03.02300,00024,15010,750315,880NBV as at 01.04.01270,00035,14010,740315,880Note 5 DividendsDuring the year the company paid a dividend of sh.1.30 on the preference shares outstanding. The directors are now proposing a dividend of sh.1.35 per s share on the number of ordinary shares outstanding at the end of the year.QUESTION TWOIt is difficult to approach the question by preparing the profit and loss account for the last six months because this is what the examiner asked for. Therefore the results for the fisrt six months have been included for the purpose of illustration only.FINANCIAL REPORTING
Past Papers Questions and Answers157Kamaro ltdTrading profit and loss account for the year ended 31 May 2002Six months toSix months to 31.05.02Total30.1.01Sh.‟000‟Sh.‟000‟Sh.‟000‟Sh.‟000‟Sh.‟000‟Sh.‟000‟Sales24,00036,00060,000Cost of sales14,40021,60036,000Gross profit9,60014,40024,000Less ExpensesAdministrative expenses3,0003,0003,000