Muhamar Gadaffi has a franchise with an international tyre manufacturer to supply its products in Kenya. He makes the accounts of his business operations to 30 April. As at 30 April 2019, the following trial balance was extracted from his books of account. Sh. Sh. Capital 144,000 Sales 259,000 Trade receivables and payables 10,920 5,768 Bank balance 371 Short-term loan 6,475 Purchases 168,000 Returns inwards and outwards 952 196 Discounts allowed and received 1,351 840 Salaries and wages 17,255 Rent and rates 9,240 Insurance 3,234 Telephone and postage 2,695 Transport and travelling 8,876 Loan interest and bank charges 1,498 General administration expenses 4,389 Inventory at 1 May 2018 8,820 Freehold land and buildings: Cost 95,560 Plant and machinery: Cost 59,500 Accumulated depreciation 10,150 Motor vehicles: Cost 43,400 Accumulated depreciation 17,700 Drawings 6,100 Provision for doubtful debts 500 Cash in hand 3,210 445,000 445,000 The following additional information has been provided: Stock of tyres as at 30 April 2019 was valued at Sh. 10,276. Prepaid insurance as at 30 April 2019 amounted to Sh. 385. Telephone bills unpaid as at 30 April 2019 totalled Sh. 511. Muhamar Gadaffi’s family had taken for its own use and as gifts to relatives and friends tyres costing Sh. 1,750 but no record had been made of this in the books. Accrued wages of Sh. 2,240 is to be provided. The depreciation on fixed assets is provided as follows: Plant and machinery 20% on reducing balance basis. Motor vehicles 25% on straight line basis The provision for doubtful debts is to be adjusted to 10% of the balance of trade receivables. Required: Statement of profit or loss (income statement) for the year ended 30 April 2019.
Muhamar Gadaffi has a franchise with an international tyre manufacturer to supply its products in Kenya. He makes the accounts of his business operations to 30 April. As at 30 April 2019, the following
Sh. Sh.
Capital 144,000
Sales 259,000
Trade receivables and payables 10,920 5,768
Bank balance 371
Short-term loan 6,475
Purchases 168,000
Returns inwards and outwards 952 196
Discounts allowed and received 1,351 840
Salaries and wages 17,255
Rent and rates 9,240
Insurance 3,234
Telephone and postage 2,695
Transport and travelling 8,876
Loan interest and bank charges 1,498
General administration expenses 4,389
Inventory at 1 May 2018 8,820
Freehold land and buildings: Cost 95,560
Plant and machinery: Cost 59,500
Motor vehicles: Cost 43,400
Accumulated depreciation 17,700
Drawings 6,100
Provision for doubtful debts 500
Cash in hand 3,210
445,000 445,000
The following additional information has been provided:
- Stock of tyres as at 30 April 2019 was valued at Sh. 10,276.
- Prepaid insurance as at 30 April 2019 amounted to Sh. 385.
- Telephone bills unpaid as at 30 April 2019 totalled Sh. 511.
- Muhamar Gadaffi’s family had taken for its own use and as gifts to relatives and friends tyres costing Sh. 1,750 but no record had been made of this in the books.
- Accrued wages of Sh. 2,240 is to be provided.
- The depreciation on fixed assets is provided as follows:
- Plant and machinery 20% on reducing balance basis.
- Motor vehicles 25% on straight line basis
- The provision for doubtful debts is to be adjusted to 10% of the
balance of trade receivables.
Required:
Statement of profit or loss (income statement) for the year ended 30 April 2019.
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