Select Ltd is registered with an authorised share capital of 300,000 ordinary shares of Ksh.1. The following trial balance was extracted from the books of the company on 31 March 2020, after the preparation of the trading account: Dr Cr Kshs Kshs Ordinary share capital, fully paid 200,000 Land and buildings at cost 170,000 Sundry debtors 38,300 Furniture and fittings at cost 80,000 General expenses 3,800 Sundry Creditors 25,000 Stock at 31 March 2020 42,000 Bank 12,000 Trading account: Gross Profit 98,050 Office salaries and expenses 25,000 Accumulated provision for depreciation on furniture and fittings 32,000 Share premium account 20,000 Advertising and selling expenses 5,000 Bad debts 250 Provision for doubtful debts 600 Profit and loss account 12,000 Directors’ fees 11,300 387650 387,650 ‘The following information is given: i. The provision for doubtful debtors is to be adjusted to Kshs 700. ii. Depreciation is to be provided in respect of furniture and fittings at 10% per annum on cost. iii. Kshs 15,000 is to be transferred from profit and loss to general reserve. iv. Provision for corporation tax was Kshs. 5,000 v. Provide for a proposed dividend on share capital at 10%. Required to Prepare: i. Profit and Loss Account and Appropriation Account (Income Statement) for the year ended 31 March 2020. ii. Balance Sheet (Statement of Financial position) as at that date.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Select Ltd is registered with an authorised share capital of 300,000 ordinary shares of Ksh.1. The following trial balance was extracted from the books of the company on 31 March 2020, after the preparation of the trading account:

	Dr	Cr
	Kshs	Kshs
Ordinary share capital, fully paid		200,000
Land and buildings at cost	170,000
Sundry debtors	38,300
Furniture and fittings at cost	80,000
General expenses	3,800
Sundry Creditors		25,000
Stock at 31 March 2020	42,000
Bank	12,000
Trading account: Gross Profit		98,050
Office salaries and expenses	25,000
Accumulated provision for depreciation on furniture and fittings		32,000
Share premium account		20,000
Advertising and selling expenses	5,000
Bad debts	250
Provision for doubtful debts		600
Profit and loss account		12,000
Directors’ fees	11,300
	387650	387,650

‘The following information is given:

i. The provision for doubtful debtors is to be adjusted to Kshs 700.

ii. Depreciation is to be provided in respect of furniture and fittings at 10% per annum on cost.

iii. Kshs 15,000 is to be transferred from profit and loss to general reserve.

iv. Provision for corporation tax was Kshs. 5,000

v. Provide for a proposed dividend on share capital at 10%.

Required to Prepare:

i. Profit and Loss Account and Appropriation Account (Income Statement) for the year ended 31 March 2020.

ii. Balance Sheet (Statement of Financial position) as at that date.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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