Make an income statement for the period ending January

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Question - Ventures Limited was incorporated on 1st January 2022 to sell branded T-Shirts to diverse customers. Initial investment in January was Kshs. 14,000,000. Ventures hired a premises and paid rent for the quarter ending 31st March 2022 of Kshs. 600,000. The cost of a plain T-Shirt in January was Kshs.1,000 and were readily available. Ventures set their selling price for a branded T-Shirt at twice the cost of a plain T-Shirt. On 15th January a total 10,000 branded T-Shirts were received. Ventures incurred a fixed charge of Kshs 200,000 for screening and a further cost of Kshs 480 for branding of each T-Shirt. On 20th January 2022 Ventures supplied the total of 5,000 T-Shirts of which 3,000 T-Shirts were paid for immediately and 2,000 T-Shirts were to be paid in March 2022. Advertising expenses paid were Kshs. 100,000.

Required -

a) Statement of cash flows for the period ending 31 January 2022 and statement of financial position at the end of that date using cash accounting.

b) Income statement for the period ending 31 January 2022 and statement of financial position at the end of that date using accrual accounting.

c) State at least three weaknesses in cash accounting based on your answers to (a) and (b) above.

Reference no: EM133184784

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