Shareholders funds 688990 non current liabilities 8

Shareholders funds
688,990
Non current liabilities
8% debentures 20,000
Deferred tax
1,200 21,200
710190
Current liabilities
Trade creditors 102,000
Tax payable (11,820 – 8,615) 3,205
Accrued directors‟ fee 150,000 255,205
TOTAL EQUITY AND LIABILITIES
965395
Workings
1. Turnover
Sh.‟000‟
As per trial balance 1,191,864
Less proceeds and disposals (1,215)
1,190,649
2. Selling and distribution costs
As per TB 78,840
Motor vehicle expenses 59,864
Wages 25,000
Depreciation: Motor vehicle 12,580
FINANCIAL REPORTING

Past Papers Questions and Answers 155
176,104
3. Administrative expenses
Wages and salaries 70,834
As per TB 11,492
Audit fees 1,400
Depreciation: fixtures 1,040
Compensation of director for loss of office 8,500
Provision for doubtful debts (16,822 – 14,400) 2,422
Director‟s fee 150,000
245,688
4. Profit on assets disposed
Motor Fixtures & Total
Cost vehicles Fittings 4,255
Acc. Dep. 2,800 1,455 3,055
NBV 2,150 905 1,200
Proceeds 650 550 1,215
Profit & Loss 715 500
6,500
DEFERRED TAX A/C
Sh. ‟000‟ Sh.‟000‟
Profit U Loss 1,800
Bal c/d (30% x 4,000) 1,200 Bal b/d 3,000
3,000 3,000
Notes to the accounts
Note 1 Accounting policies
These 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 tax
The profit before tax has been arrived at after charging the following expenses
Sh.‟000‟
Directors fee 205,000
Compensation to director for loss of office 8,500
Depreciation 13,650
Auditors fee 1,400
Staff costs 40,834
KASNEB PANEL ● R
EVISION
K
IT

156 Answers – Past Papers
Note 3 Taxation
Corporation tax is based on the adjusted profits for tax purpose at a corporation tax rate of 30%
Note 4 Propety plant and equipment
Freehold land Motor Fixtures &
COST/VALUATION
& Buildings vehicles Fittings Total
Sh.‟000‟ Sh.‟000‟ Sh.‟000‟ Sh.‟000‟
Bal as at 01.04.01 270,000 48,960 19,200 338,160
Additions - 2,240 1,600 3,840
Disposals - (2,800) (1,455) (4,255)
Revaluations 30,000 - - 30,000
Bal as at 31.03.02 300,000 48,400 19,345 367,745
Accumulated Depreciation
Bal as at 01.04.01 - 13,820 8,460 22,280
Eliminated on disposal - (2,150) (905) (3,055)
Charge for the year - 12,580 1,040 13,650
Bal as at 31.03.02 - 24,250 8,595 32,845
NBV as at 31.03.02 300,000 24,150 10,750 315,880
NBV as at 01.04.01 270,000 35,140 10,740 315,880
Note 5 Dividends
During 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 TWO
It 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 Answers 157
Kamaro ltd
Trading profit and loss account for the year ended 31 May 2002
Six months to Six months to 31.05.02 Total
30.1.01
Sh.‟000‟ Sh.‟000‟ Sh.‟000‟ Sh.‟000‟ Sh.‟000‟ Sh.‟000‟
Sales 24,000 36,000 60,000
Cost of sales 14,400 21,600 36,000
Gross profit 9,600 14,400 24,000
Less Expenses
Administrative expenses 3,000 3,000 3,000